SHARE PURCHASE AGREEMENT
dated as of June 30, 1993
among
UNIONAMERICA ACQUISITION COMPANY LTD.,
an English private company limited by shares,
UNIONAMERICA HOLDINGS LTD.,
an English private company limited by shares,
and
THE CONTINENTAL CORPORATION,
a New York corporation
TABLE OF CONTENTS
Page
ARTICLE I
PURCHASE AND SALE OF SHARES; EXCHANGE OF
BUYER SHARES
SECTION 1.1. Purchase and Sale of Shares . . 1
SECTION 1.2. Exchange of Buyer Shares for A
Senior Preference Shares. . . . . . . 2
ARTICLE II
CLOSING
SECTION 2.1. Closing . . . . . . . . . . . . 3
SECTION 2.2. Documents to be Delivered . . . 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
SECTION 3.1. Corporate Existence . . . . . . 8
SECTION 3.2. Authorization; Enforcement. . . 8
SECTION 3.3. Consents and Approvals. . . . . 9
SECTION 3.4. No Conflicts. . . . . . . . . . 9
SECTION 3.5. Capital Structure . . . . . . . 10
SECTION 3.6. Subsidiaries. . . . . . . . . . 10
SECTION 3.7. Company Documents . . . . . . . 10
SECTION 3.8. Financial Statements. . . . . . 11
SECTION 3.9. Annual Statements . . . . . . . 12
SECTION 3.10. Absence of Certain Changes or
Events. . . . . . . . . . . . . . . . 13
SECTION 3.11. Contracts . . . . . . . . . . . 14
SECTION 3.12. Litigation. . . . . . . . . . . 17
SECTION 3.13. Liabilities and Reserves. . . . 17
SECTION 3.14. Taxation. . . . . . . . . . . . 18
SECTION 3.15. Assets. . . . . . . . . . . 27
SECTION 3.16. Compliance with Laws, etc. . 28
SECTION 3.17. Insurance for Company's
Operations . . . . . . . . . 28
SECTION 3.18. Insurance Business . . . . . 29
SECTION 3.19. Reinsurance. . . . . . . . . 29
SECTION 3.20. Service Marks, Trademarks,
Intellectual Property, etc.. . . . . . . . 30
SECTION 3.21. Employee Benefit Plans . . . 31
SECTION 3.22. Directors, Officers and
Employees . . . . . . . . . . . . . . 33
SECTION 3.23. Banks, Brokerage Accounts and
Powers of Attorney . . . . . . . 33
SECTION 3.24. Brokers and Finders, etc.. . . 34
SECTION 3.25. Securities . . . . . . . . . . 34
SECTION 3.26. Contribution . . . . . . . . . 34
SECTION 3.27. Unionamerica Reorganization . 34
SECTION 3.28. Termination of Certain Affiliate
Contracts. . . . . . . . . . . . 34
SECTION 3.29. Full Disclosure. . . . . . . . 34
SECTION 3.30. No Representation as to
Insurance or Reinsurance Reserves. . . 34
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
AND PARENT
SECTION 4.1. Corporate Existence. . . . . 35
SECTION 4.2. Authorization; Enforcement . . 35
SECTION 4.3. Consents and Approvals . . . . 35
SECTION 4.4. No Conflicts . . . . . . . . . 36
SECTION 4.5. Capital Structure . . . . . . . 36
SECTION 4.6. Brokers and Finders, etc. . . . 37
SECTION 4.7. Available Funds . . . . . . . . 37
SECTION 4.8. Securities. . . . . . . . . . . 37
SECTION 4.9. Full Disclosure . . . . . . . . 37
ARTICLE V
COVENANTS
SECTION 5.1. Operations in the Ordinary
Course. . . . . . . . . . . . . . . . 37
SECTION 5.2. Restrictions. . . . . . . . . . 38
SECTION 5.3. Related Matters. . . . . . . . 40
SECTION 5.4. Access to Information. . . . . 41
SECTION 5.5. Termination of Certain Affiliate
Agreements . . . . . . . . . . 42
SECTION 5.6. No Solicitation . . . . . . . . 42
SECTION 5.7. Financing . . . . . . . . . . . 43
SECTION 5.8. Filings and Authorizations. . . 43
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. Conditions to Buyer's and
Parent's Obligations. . . . . . . . . 43
SECTION 6.2. Conditions to Seller's
Obligations . . . . . . . . . . . . . 45
ARTICLE VII
FURTHER AGREEMENTS
SECTION 7.1. Pension Agreement . . . . . . . 45
SECTION 7.2. Non-Competition . . . . . . . . 50
SECTION 7.3. Public Announcements . . . . . 50
SECTION 7.4. Expenses. . . . . . . . . . . . 51
SECTION 7.5. D & O Insurance.. . . . . . . . 51
SECTION 7.6. Seller's Covenants Regarding
Senior Preference Shares.. . . . . . 52
SECTION 7.7. Use of Certain Names. . . . . . 52
SECTION 7.8. Further Assurances. . . . . . . 53
SECTION 7.9. Books and Records . . . . . . . 53
SECTION 7.10. Amendments of Schedules . . . . 53
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1. Survival of Representations,
etc. . . . . . . . . . . . 54
SECTION 8.2. Indemnification . . . . . . . . 54
SECTION 8.3. Indemnification Procedures. . . 58
SECTION 8.4. LUC Indemnification . . . . . . 60
SECTION 8.5. Indemnification Payments. . . . 69
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Termination . . . . . . . . . . 70
SECTION 9.2. Effect of Termination . . . . . 70
SECTION 9.3. Consent to Jurisdiction and
Service of Process . . . . . . . . . . 71
SECTION 9.4. Notices . . . . . . . . . . . . 71
SECTION 9.5. Entire Agreement; No Third Party
Beneficiaries. . . . . . . . . 73
SECTION 9.6. Waivers and Amendments; Non-
Contractual Remedies; Preservation
of Remedies . . . . . . . . . . . . . 74
SECTION 9.7. Payments and Currency . . . . . 74
SECTION 9.8. Binding Effect; No Assignment . 75
SECTION 9.9. Severability. . . . . . . . . . 75
SECTION 9.10. Counterparts. . . . . . . . . . 75
SECTION 9.11. Interpretation. . . . . . . . . 75
SECTION 9.12. Governing Law . . . . . . . . . 76
SECTION 9.13. Waiver of Jury Trial. . . . . 76
Exhibit A Form of Contingent Payment
Agreement between Parent and
Seller
Exhibit B Terms of Senior Preference Shares
Exhibit C Form of Tax Indemnification
Agreement between Seller and
Buyer
Exhibit D Form of Senior Preference Share
Support Agreement between
Parent and Seller
Exhibit E Form of Run-Off and Accounting
Services Agreement between
CRC(UK) and the Company
Exhibit F Form of Assignment of
Trademarks between Seller and
the Company
Exhibit G Form of Greenwich View Transfer
Documents between Company and
Lombard
Exhibit H Form of 77 Gracechurch Street
Agreement between CIH (Europe)
and the Company
Exhibit I Form of 85 Gracechurch Street
License between UA Management
and the Company
Exhibit J Form of 85 Gracechurch Street
Agreement between UA
Management and the Company
Exhibit K Form of Information Technology
Services Agreement between UA
Management and the Company
Exhibit L Form of Opinion of Debevoise &
Plimpton
Exhibit M Form of Opinion of Lovell White
Durrant
Exhibit N Form of Opinion of Freshfields
Exhibit O Form of Opinion of LeBoeuf,
Lamb, Leiby & MacRae
SCHEDULES
Schedule 2.2 Resigning Directors and
Officers
Schedule 3.6 Subsidiaries, Joint Ventures, etc.
Schedule 3.8(b) Financial Statements
Schedule 3.8(c) Changes in Investment Portfolio
Schedule 3.9 Annual Statements
Schedule 3.10 Certain Changes or Events
Since the Balance Sheet Date
Schedule 3.11 Contracts
Schedule 3.12 Litigation
Schedule 3.13(a) Balance Sheet - Additional
Matters
Schedule 3.13(d) KPMG Report Information
Schedule 3.14 Tax Matters
Schedule 3.15(a)(1) Investments
Schedule 3.15(a)(2) Transactions Affecting
Company's Investment Portfolio
Schedule 3.15(c) Other Property
Schedule 3.16 Compliance with Laws
Schedule 3.17 Insurance
Schedule 3.19 Reinsurance
Schedule 3.20(a)(1) Service Marks, Trademarks,
Intellectual Property
Schedule 3.20(a)(2) Software Matters
Schedule 3.21 Employee Benefit Plans
Schedule 3.22 Key Employees
Schedule 3.23 Banks, Brokerage Accounts and
Powers of Attorney
Schedule 3.24 Brokers and Finders
Schedule 5.5 Terminating Affiliate Contracts
Schedule 7.1 Actuary's Letter
Schedule 7.8(b) Accounting Treatment
DEFINITIONS
Defined Term Section No.
1992 Company Financials 3.14(b)(1)
77 Gracechurch Street Agreement 2.2(e)(8)
85 Gracechurch Street Agreement 2.2(e)(10)
85 Gracechurch Street License 2.2(e)(9)
A Senior Preference Shares 1.2
Accommodation 8.4(a)(1)(B)
Accord 3.11(a)(8)
Actuary's Letter 7.1(a)(2)
Affiliate 2.2(e)(16)
Agency Contracts 3.11(a)(12)
Annual Statements 3.9(a)
Assignment of Trademarks 2.2(e)(6)
B Senior Preference Shares 4.5
Balance Sheet Date 3.8(a)(1)
Business Days 1.1(b)(1)
Buyer Preamble
Buyer Shares 1.1(b)(2)
Buyer's Actuary 7.1(a)(5)
Buyer's Scheme 7.1(a)(6)
Buyer Tax Benefit 8.2(b)(1)
Cash Consideration 1.1(b)(1)
CIH (Europe) 2.2(e)(8)
Closing 2.1
Closing Date 2.1
Commitment Date 5.7
Company Preamble
Company Balance Sheet 3.8(a)(1)
Company Financials 3.8(a)(1)
Companies Act 3.7(a)
Confidential Information 5.4
Confidentiality Agreement 5.4
Consents 3.3
Contingent Payment Agreement 1.1(d)
Contract 3.11(a)
CRC(UK) 2.2(e)(5)
Damages 8.2(a)
Development Agreement 8.4(a)(2)(A)(i)(I)
Employee 3.10(c)
Employee Benefit Plans 3.10(c)
Event 3.14(a)(1)
Exchange Act 2.2(e)(15)
Excess Space 8.4(a)(2)(A)(ii)(II)
Governmental Authority 3.3
Greenwich View Transfer Documents 2.2(e)(7)
Group Relief 3.14(a)(2)
IRC 3.14(b)(6)
IT Services Agreement 2.2(e)(10)
Indemnified Person 8.3(a)
Indemnifying Person 8.3(a)
Information 8.4(e)(1)
Initial Due Diligence Period 5.4
Insurance Arrangements 3.4(b)
Insurance Companies Act 3.9(a)
Intellectual Property Right 3.20(a)
Interest 7.1(a)(3)
Interim Period 7.1(a)(7)
Intervening Event 7.10(a)
Investment Policies 3.8(c)
Investment Proposal 5.6
Investments 3.15(a)(1)
Key Employee 3.22(a)
KPMG Report 3.13(d)
Liens 1.1(a)
Litigation 3.12(a)
Lombard 2.2(e)(7)
LUC 8.4(a)(1)(B)
LUC Benefits 8.4(a)(1)
LUC Liabilities 8.4(a)(2)
Material Adverse Effect 3.4(b)
Material Properties 3.15(c)
MBL 8.4(a)(1)(A)
Parent Preamble
Payment Date 7.1(a)(4)
Pension Transfer Date 7.1(a)(7)
Permit 3.18
Person 3.5
Purchase Price 1.1(b)
Reinsurance Agreement 3.19
Reinsurance Provider 8.2(a)(4)
Relevant Employees 7.1(a)(8)
Relief 3.14(a)(3)
Return 3.14(b)(3)
Run-Off Agreement 2.2(e)(5)
Scheduled Contract 3.11(a)
Scheduled Investments 3.15(a)(1)
Securities Act 3.25
Seller Preamble
Seller's Actuary 7.1(a)(11)
Seller Tax Benefit 8.2(d)(1)
Senior Preference Shares 4.5
Shareholders Agreement 8.4(a)(2)(A)(ii)(I)
Shares Preamble
State 3.3
Support Agreement 2.2(e)(4)
Tax 3.14(a)(4)
Tax Authority 3.14(a)(5)
Tax Clearance 3.14(b)(4)
Tax Indemnification Agreement 2.2(e)(3)
Taxes Act 3.14(a)(6)
this Agreement Preamble
to the knowledge of Seller 9.11
Transaction Documents 2.2(h)
Transfer Amount 7.1(a)(1)
Transferring Employees 7.1(a)(9)
UA Management 2.2(e)(9)
UK Accounting Standards 3.13(a)
Unaudited Financials 3.8(a)(2)
Unionamerica Business 7.2
Unionamerica Reorganization 3.27
Unionamerica Scheme 7.1(a)(10)
VAT 3.14(a)(7)
VAT Legislation 3.14(a)(8)
SHARE PURCHASE AGREEMENT, dated as of June 30, 1993 ("this
Agreement"), among UNIONAMERICA ACQUISITION COMPANY LTD., an English
private company limited by shares ("Buyer"), UNIONAMERICA HOLDINGS
LTD., an English private company limited by shares ("Parent"),
and THE CONTINENTAL CORPORATION, a New York corporation ("Seller").
W I T N E S S E T H:
WHEREAS, Seller owns beneficially 40,700,000 ordinary shares
of US $1 each of UNIONAMERICA INSURANCE COMPANY LIMITED, an English
private company limited by shares (the "Company"), constituting all
of the issued or allotted share capital of the Company (the "Shares"),
which Shares are represented by share warrants to bearer of the
Company;
WHEREAS, Seller desires to sell the Shares to
Buyer, and Buyer desires to purchase the Shares from Seller,
on the terms and subject to the conditions set forth herein;
and
WHEREAS, Parent owns beneficially all of the
issued share capital of Buyer and desires that Buyer purchase
the Shares from Seller, on the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the
premises and representations, warranties and agreements
herein contained, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES; EXCHANGE OF BUYER SHARES
SECTION 1.1. Purchase and Sale of Shares.
(a) On the terms and subject to the
conditions set forth herein, Seller agrees to sell and transfer,
and Buyer agrees to purchase, at the Closing, the Shares
(represented by share warrants to bearer), free from all liens,
pledges, mortgages, security interests, leases, charges, options,
rights of first refusal, easements, servitudes, encumbrances,
equities, claims or other third party rights (including rights of
pre-emption), restrictions or limitations, in each case of any
nature whatsoever (collectively, "Liens"), together with all
rights which now are, or at any time hereafter may become,
attached to the Shares (including the right to receive all
dividends and other distributions declared, made or paid after
the date hereof).
(b) As consideration for the purchase of the
Shares and for Seller's agreements set forth in Section 7.2, at
the Closing, Buyer shall pay to Seller an aggregate purchase
price of One Hundred Ten Million United States Dollars
(US $110,000,000), subject to adjustment as provided in
Section 1.1(c) (as so adjusted, the "Purchase Price"), consisting
of cash and securities as follows: (1) cash in the amount of
Ninety-Five Million United States Dollars (US $95,000,000),
subject to adjustment as provided in Section 1.1(c) (as so
adjusted, the "Cash Consideration"), payable by wire transfer
in immediately available funds to an account that Seller shall
designate in writing to Buyer no less than five (5) "Business
Days" (which, for purposes of this Agreement, means any day
that is not a Saturday, Sunday or other day on which
commercial banks in New York City or London, England are
required or authorized by law to be closed) prior to the
Closing Date; and (2) 15,000,000 ordinary shares of US $1
each of Buyer (the "Buyer Shares") (represented by share
warrants to bearer), free from all Liens (other than Liens
which may be required by lenders to Buyer or Parent in
connection with financing for this transaction), together with
all rights which now are, or at any time hereafter may
become, attached to the Buyer Shares (including the right to
receive all dividends and other distributions declared, made or
paid after the date hereof).
(c) The Purchase Price shall be subject to
adjustment as provided in this paragraph (c):
(1) if the Closing occurs before August
31, 1993, then the amount of cash payable pursuant to
Section 1.1(b)(1) shall be reduced by an amount equal
to the product of (A) US $110,000,000 multiplied by (B)
a fraction, the numerator of which is the number of
calendar days from (but excluding) the Closing Date to
(and including) August 31, 1993 and the denominator
of which is 365, multiplied by (C) 6.75%;
(2) if the Closing occurs after August
31, 1993, then the amount of cash payable pursuant to
Section 1.1(b)(1) shall be increased by an amount equal
to the product of (A) US $110,000,000 multiplied by (B)
a fraction, the numerator of which is the number of
calendar days from (but excluding) August 31, 1993 to
(and including) the Closing Date and the denominator
of which is 365, multiplied by (C) 6.75%; and
(3) if the Closing occurs on August 31,
1993, then the Purchase Price shall not be adjusted.
(d) In addition to the Purchase Price,
following the Closing, Parent shall pay to Seller the
payment(s) (if any) to the extent required by, and on the
terms and subject to the conditions set forth in, the
Contingent Payment Agreement between Parent and Seller,
substantially in the form of Exhibit A (the "Contingent
Payment Agreement").
SECTION 1.2. Exchange of Buyer Shares for A
Senior Preference Shares. On the terms and subject to the
conditions contained herein, at the Closing, Parent agrees to
allot and issue to Seller (or its nominee) 15,000,000 A Senior
Preference Shares of US $1 each of Parent, having the terms
set forth in Exhibit B (the "A Senior Preference Shares") (and
deliver to Seller (or its nominee) the relative share
certificate(s) in the name of Seller (or its nominee)), free
from all Liens, together with all rights which now are, or at
any time hereafter may become, attached to such A Senior
Preference Shares (including the right to receive all dividends
and other distributions declared, made or paid after the
Closing Date), in exchange for all of the Buyer Shares allotted
and issued to Seller (as represented by share warrants to
bearer) pursuant to Section 1.1(b)(2); and Seller agrees to
exchange immediately the Buyer Shares (as represented by
share warrants to bearer), free from all Liens (except as
provided in Section 1.1(b)) and together with all rights which
now are, or at any time hereafter may become, attached to the
Buyer Shares (including the right to receive all dividends and
other distributions declared, made or paid after the date
hereof) for the A Senior Preference Shares.
ARTICLE II
CLOSING
SECTION 2.1. Closing. The Closing of the
transactions contemplated herein shall take place at 10:00
a.m., local time, on the date that is five (5) Business Days
after the satisfaction of the conditions set forth in Article VI
(or waiver thereof, to the extent permitted by the terms of this
Agreement), at the offices of Freshfields, 65 Fleet Street,
London EC4Y 1HS, England, or at such other time and place
as the parties may mutually determine in writing (the
"Closing"). The actual date on which the Closing shall occur
is referred to herein as the "Closing Date".
SECTION 2.2. Documents to be Delivered. To
effect the transactions referred to in Article I, Buyer, Parent
and Seller shall, at the Closing, deliver the following:
(a) The Shares. Seller shall deliver to Buyer
the share warrants to bearer in respect of all the Shares.
(b) The Cash Consideration. Buyer shall
deliver to Seller the Cash Consideration pursuant to Section
1.1.
(c) The Buyer Shares. Buyer shall allot and
issue to Seller the Buyer Shares (and deliver to Seller the
share warrants to bearer in respect thereof), for immediate
exchange pursuant to Section 1.2.
(d) The A Senior Preference Shares. In
exchange for the sale and transfer to it by Seller of all of the
Buyer Shares, Parent shall allot and issue to Seller (or its
nominee) the A Senior Preference Shares (and deliver to
Seller (or its nominee) the relative share certificate(s) in the
name of Seller (or its nominee)) pursuant to Section 1.2.
(e) Seller's Documents. Seller shall deliver or
cause to be delivered to Buyer (or to any Person (as defined
in Section 3.5) whom Buyer may designate):
(1) confirmation and/or evidence, in a
form reasonably satisfactory to Buyer, of the fulfillment
of the conditions specified in Section 6.1;
(2) a counterpart original of the
Contingent Payment Agreement, duly executed by
Seller;
(3) a counterpart original of the Tax
Indemnification Agreement, substantially in the form of
Exhibit C (the "Tax Indemnification Agreement"), duly
executed by Seller;
(4) a counterpart original of the Senior
Preference Share Support Agreement, substantially in
the form of Exhibit D (the "Support Agreement"), duly
executed by Seller;
(5) a counterpart original of the Run-Off
and Accounting Services Agreement, substantially in
the form of Exhibit E (the "Run-Off Agreement"), duly
executed by Continental Reinsurance Corporation
(UK) Limited ("CRC(UK)") and the Company;
(6) a counterpart original of the
Assignment of Trademarks, substantially in the form of
Exhibit F (the "Assignment of Trademarks"), duly
executed by Seller and the Company;
(7) a counterpart original of (i) the
transfer, (ii) the assignment of certain contractual rights
and (iii) the covenant by Lombard Continental
Insurance plc ("Lombard") with the property's
management company, in each case relating to the
transfer to Lombard (or its designee) of the Greenwich
View Place property, substantially in the form of
Exhibit G (the "Greenwich View Transfer Documents"),
duly executed by Lombard and the Company;
(8) a counterpart original of the
agreement for lease relating to the office space
currently occupied by the Company located at 77
Gracechurch Street, London, England, substantially in
the form of Exhibit H (the "77 Gracechurch Street
Agreement"), duly executed by The Continental
Insurance Holdings (Europe) Limited ("CIH (Europe)")
as lessor, and the Company, as lessee;
(9) a counterpart original of the license
relating to the office space currently occupied by the
Company located at 85 Gracechurch Street, London,
England, substantially in the form of Exhibit I (the "85
Gracechurch Street License"), duly executed by
Unionamerica Management Company Limited ("UA
Management"), as licensor, and the Company, as
licensee;
(10) a counterpart original of the
agreement for the sale and purchase of the basement
premises of 85 Gracechurch, London, England,
substantially in the form of Exhibit J (the "85
Gracechurch Street Agreement"), duly executed by UA
Management and the Company;
(11) a counterpart original of the
Information Technology Services Agreement,
substantially in the form of Exhibit K (the "IT Services
Agreement"), duly executed by UA Management and
the Company;
(12) the Certificate of Incorporation, a
true, complete and correct copy of the Memorandum
and Articles of Association, the Common Seal, all
minute books, Share Registers and Share Certificate
Books (with any unissued share certificates) and other
statutory books (which shall be written-up to (but not
including) the Closing Date) of the Company;
(13) all such documents (including any
powers of attorney under which any document required
to be delivered under this Section 2.2 has been
executed and any necessary waivers or consents of
Seller and/or any of its Affiliates (as defined below))
as may be reasonably required (if any) to enable Buyer
and/or its nominee to be the holder(s) of the Shares
(as represented by the share warrants to bearer) and to
permit each of Seller and/or such Affiliates to
consummate the transactions contemplated by this
Agreement;
(14) a letter of resignation in the form of
the agreed draft, duly executed as a Deed, by each of
the directors and officers of the Company listed on
Schedule 2.2;
(15) copies of the minutes (certified by a
duly appointed officer to be true, complete and correct)
of meetings of the Boards of Directors of:
(A) the Company, authorizing
the execution and delivery of, and the
performance by the Company of its obligations
under, the Run-Off Agreement, the Assignment
of Trademarks, the Greenwich View Transfer
Documents, the 77 Gracechurch Street
Agreement, the 85 Gracechurch Street License,
the 85 Gracechurch Street Agreement, and the
IT Services Agreement;
(B) Seller, authorizing the
execution and delivery of, and the performance
by Seller of its obligations under, this
Agreement, the Contingent Payment Agreement,
the Tax Indemnification Agreement, the Support
Agreement, the Assignment of Trademarks and
the Greenwich View Transfer Documents;
(C) CRC(UK), authorizing the
execution and delivery of, and the performance
by CRC(UK) of its obligations under, the Run-
Off Agreement;
(D) Lombard, authorizing the
execution and delivery of, and the performance
by Lombard of its obligations under, the
Greenwich View Transfer Documents;
(E) CIH (Europe), authorizing
the execution and delivery of, and the
performance by CIH (Europe) of its obligations
under, the 77 Gracechurch Street Agreement;
and
(F) UA Management, authorizing the execution
and delivery of, and the performance by UA Management
of its obligations under, the 85 Gracechurch Street
License, the 85 Gracechurch Street Agreement,
and the IT Services Agreement; and
(16) all documentation, duly executed by
Seller and/or its applicable Affiliates and in form and
substance reasonably satisfactory to Buyer, evidencing
the termination of the Contracts (as defined in Section
3.11(a)) listed on Schedule 5.5. As used in this
Agreement, "Affiliate" has the meaning ascribed to such
term in Rule 12b-2 under the United States Securities
Exchange Act of 1934, as amended (the "Exchange
Act").
(f) Buyer's Documents. Buyer shall deliver or
cause to be delivered to Seller (or to any Person whom Seller
may designate):
(1) confirmation and/or evidence, in a
form reasonably satisfactory to Seller, of the fulfillment
of the conditions specified in Section 6.2;
(2) a counterpart original of the
Contingent Payment Agreement, duly executed by Parent;
(3) a counterpart original of the Tax
Indemnification Agreement, duly executed by Buyer;
(4) a counterpart original of the Support
Agreement, duly executed by Parent;
(5) copies of the minutes (certified by a
duly appointed officer to be true, complete and correct)
of meetings of the Boards of Directors of:
(A) Buyer, authorizing (i) the
execution and delivery of, and the performance
by Buyer of its obligations under, this
Agreement and the Tax Indemnification
Agreement and (ii) the issuance of the Buyer
Shares; and
(B) Parent, authorizing (i) the
execution and delivery of, and the performance
by Parent of its obligations under, this
Agreement, the Contingent Payment Agreement
and the Support Agreement and (ii) the issuance
of the Senior Preference Shares (as defined in
Section 4.5);
(6) a certificate, dated the Closing
Date, of the Secretary of Buyer attaching a true,
complete and correct copy of the Memorandum and
Articles of Association of Buyer;
(7) a certificate, dated the Closing Date,
of the Secretary of Parent attaching a true, complete
and correct copy of the Memorandum and Articles of
Association of Parent (containing the terms of the A
Senior Preference Shares and the B Senior Preference
Shares (as defined in Section 4.5) set forth in Exhibit
B); and
(8) all such documents (including any
powers of attorney under which any document required
to be delivered under this Section 2.2 has been
executed and any necessary waivers or consents of
Buyer and/or Parent) as may be reasonably required (if
any) to enable Seller (or its nominee) to be the holder
of the Buyer Shares and the A Senior Preference
Shares and to permit each of Buyer and Parent to
consummate the transactions contemplated by this
Agreement.
(g) Closing Documents. Seller, Buyer and Parent shall
each deliver all documents required to be delivered pursuant to
Sections 6.1 and 6.2.
(h) Satisfaction with Documents. All
Transaction Documents executed and delivered by Buyer
and/or Parent shall be in form and substance, and shall be
executed in a manner, reasonably satisfactory to Seller. All
Transaction Documents executed and delivered by Seller
and/or its Affiliates, shall be in form and substance, and shall
be executed in a manner, reasonably satisfactory to Buyer and
Parent. As used in this Agreement, "Transaction Documents"
means this Agreement, the Contingent Payment Agreement,
the Tax Indemnification Agreement, the Support Agreement,
the Run-Off Agreement, the Assignment of Trademarks, the
Greenwich View Transfer Documents, the 77 Gracechurch
Street Agreement, the 85 Gracechurch Street License, the 85
Gracechurch Street Agreement, and the IT Services
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer and
Parent as follows:
SECTION 3.1. Corporate Existence.
(a) Seller's Existence. Seller is a corporation
duly incorporated, validly existing and in good standing under
the laws of the State of New York and has full power and
authority and possesses all rights, licenses, authorizations and
approvals, governmental or otherwise, necessary to entitle it to
own the Shares and to perform its obligations under the
Transaction Documents to which it is a party.
(b) Company's Existence. The Company is a
private company limited by shares, incorporated in England
and registered in England with registered no. 1022903. No
order has been made or resolution passed for the winding up
of the Company, nor has any liquidator, receiver,
administrative receiver or administrator been appointed in
respect of the Company or any of its assets or business. The
Company has full power and authority and possesses all rights,
licenses, authorizations and approvals, governmental or
otherwise, necessary to entitle it: (1) to enter into and
perform its obligations under the Transaction Documents to
which it is a party; (2) to own, lease or otherwise hold its
properties and assets and to carry on its business as currently
conducted; and (3) subject to Section 3.20, to use the
"Unionamerica" name.
SECTION 3.2. Authorization; Enforcement.
Each of Seller and its Affiliates has all necessary corporate
power and authority to execute and deliver the Transaction
Documents to which it is a party, and to perform its
obligations under such Transaction Documents in accordance
with the terms of such Transaction Documents. Each of
Seller and its Affiliates has taken all necessary corporate
action to duly and validly authorize the execution and delivery
of the Transaction Documents to which it is a party and the
consummation of the transactions contemplated by such
Transaction Documents including, in the case of Seller, all
corporate action necessary to conclusively and irrevocably
effect the contribution in the amount of US $44,928,493 made
on June 17, 1993 from Seller to the Company. This
Agreement has been duly executed and delivered by Seller
and constitutes a valid and legally binding obligation of Seller,
enforceable against Seller in accordance with its terms. On or
before the Closing Date, each of the other Transaction
Documents to which Seller or any of its Affiliates is a party
will be duly executed and delivered by Seller or such Affiliate,
as the case may be, and when executed and delivered by
Seller or such Affiliate, as the case may be, will constitute a
valid and legally binding obligation of Seller or such Affiliate,
as the case may be, enforceable against Seller or such
Affiliate, as the case may be, in accordance with its terms.
SECTION 3.3. Consents and Approvals. No
consent, approval, authorization, license or order of, or
registration or filing with, or notice to, any United Kingdom,
United States Federal, "State" (which for purposes of this
Agreement shall mean any state of the United States, the
District of Columbia, the Commonwealth of Puerto Rico or
any possession or territory of the United States), local, foreign
or other court, administrative agency or commission, insurance
or securities regulatory authority or other governmental
authority or instrumentality or regulatory or self-regulatory
body or securities or commodities exchange (each, a
"Governmental Authority") (such consents, approvals,
authorizations, licenses, orders, registrations, filings and
notices being herein called, collectively, "Consents") is
required to be obtained, made or given by or with respect to
Seller or any of its Affiliates in connection with the execution
and delivery by Seller or any of its Affiliates of any of the
Transaction Documents to which Seller or such Affiliate is a
party, the performance by Seller or such Affiliate of its
obligations under any of such Transaction Documents or the
consummation of the transactions contemplated by such
Transaction Documents, other than as described in
Sections 6.1(e) and 6.1(f).
SECTION 3.4. No Conflicts. Neither the
execution or the delivery by Seller or any of its Affiliates of
the Transaction Documents to which Seller or such Affiliate is
a party, nor the performance by Seller or any such Affiliate of
such Transaction Documents, or the consummation of the
transactions contemplated by such Transaction Documents,
will:
(a) conflict with or result in a breach of any
provision of the Certificate of Incorporation, By-Laws,
Memorandum and Articles of Association or other charter or
organizational documents of Seller or such Affiliate; or
(b) result in any conflict with, breach or
violation of, or default (or event which, with notice or lapse of
time or both, would constitute a default) under, require any
consent or approval which has not been obtained with respect
to, give rise to any right of termination, cancellation or
acceleration of any obligations or loss of any benefit under, or
result in the imposition of any Liens on any of the properties
or assets of Seller or such Affiliate under: (1) any Contract
(as defined in Section 3.11(a)) (other than insurance or
reinsurance Contracts and related letters of credit, trust
arrangements, custodial arrangements and structured
settlements entered into by the Company in the ordinary
course of business consistent with past practice (collectively,
the "Insurance Arrangements") and other than as provided in
Section 8.4(e) hereof) or permit, concession, franchise or
license to which Seller or such Affiliate is a party or by which
it or any of its properties or assets is bound or (2) any order,
decree, injunction, law, rule or regulation applicable to Seller
or such Affiliate or any of its properties or assets, which
conflict, breach, violation or default, or failure to obtain
consent or approval, or right of termination, cancellation or
acceleration or loss of benefit or imposition of any Lien would
have, in any case or in the aggregate, a material adverse effect
on the Company's business, operations, assets, liabilities or
financial condition (a "Material Adverse Effect") or which
would interfere in any material way with the ability of Seller
or such Affiliate to consummate the transactions contemplated
by such Transaction Documents.
SECTION 3.5. Capital Structure. The
authorized share capital of the Company consists of 45,000,000
ordinary shares of US $1 each, of which 40,700,000 shares are
issued and constitute the Shares. No other shares of any class
in the capital of the Company are authorized, allotted or
issued. All of the Shares have been duly authorized and
validly issued, are fully paid and are represented by share
warrants to bearer. Seller owns beneficially all of the Shares,
free and clear of all Liens. There are no warrants, options,
Contracts, convertible or exchangeable securities or other
preferential rights, arrangements or commitments pursuant to
which the Company is or may become obligated to allot, issue,
sell, purchase or redeem any shares in its capital or other
equity ownership interests or securities, other than as
contemplated by this Agreement. There are no standstill,
voting or similar agreements or Contracts nor any rights of
first offer or first refusal to which Seller or any of its Affiliates
is a party that currently or in the future will limit the ability of
any individual, corporation, partnership, firm, joint venture,
unincorporated organization, governmental or regulatory
authority or other entity (each, a "Person") to acquire, vote,
sell, hold or otherwise deal with the Shares or any interest
therein or right in respect thereof. Upon consummation of
the transactions contemplated by this Agreement, Buyer will
acquire from Seller beneficial ownership of the Shares, free
and clear of all Liens, together with all rights which now are,
or at any time hereafter may become, attached to them,
including the right to receive all dividends and other
distributions declared, made or paid after the date hereof.
SECTION 3.6. Subsidiaries. Except as set forth
on Schedule 3.6, the Company does not own, or have any
interest of any nature whatsoever in, directly or indirectly,
more than five percent (5%) of the outstanding equity
securities of, or otherwise possess, directly or indirectly, the
power to direct or cause the direction of the management and
policies of any Person nor is the Company a party to any joint
venture, consortium, partnership or other profit (or loss)
sharing agreement or Contract, other than Insurance
Arrangements.
SECTION 3.7. Company Documents. (a) Seller has delivered
to Buyer and/or Parent prior to the date of this Agreement:
(1) true, complete and correct copies of
the Memorandum and Articles of Association of the
Company, with all amendments thereof, having
attached thereto all of the resolutions required by the
Companies Act 1985, as amended by the Companies
Act 1989 (as so amended, the "Companies Act"), to be
so attached; and
(2) all of the forms, filings and
information supplied to the Registrar of Companies
under the Companies Act since May 1, 1987, which are
all of the forms, filings and information required by the
Companies Act to be so supplied since such date.
(b) Seller has made available for inspection by
Buyer and Parent copies of the minutes of all meetings and
written resolutions in lieu of meetings of the Board of
Directors of the Company and of its shareholders since May 1,
1987. The books of account of the Company have been
properly completed in all material respects and the statutory
books and other records of the Company (other than the
books of account) have been properly and accurately
completed in all material respects. The books of account,
statutory books and other records of the Company contain all
material information required to be recorded in them, have
been maintained in all material respects in accordance with all
applicable laws and generally accepted accounting practices on
a proper and consistent basis, and are in its possession or
under its control.
SECTION 3.8. Financial Statements.
(a) Seller has delivered to Buyer and Parent the
following financial statements (which term, as used in this
Agreement, includes all footnotes and schedules, if any,
thereto): (1) the audited balance sheet of the Company (the
"Company Balance Sheet") as at December 31, 1992 (the
"Balance Sheet Date"), December 31, 1991 and December 31,
1990, and the related underwriting revenue accounts and
profit and loss accounts for each of the three fiscal years
ended December 31, 1992, December 31, 1991 and
December 31, 1990, including the reports of KPMG Peat
Marwick thereon (collectively, the "Company Financials"); and
(2) the unaudited balance sheet of the Company as at March
31, 1993 and the related underwriting revenue accounts and
profit and loss accounts (collectively, the "Unaudited
Financials").
(b) Except as set forth on Schedule 3.8(b), the
Company Financials are based on the books and records of
the Company, fairly present the financial position and results
of operations of the Company, as at the dates and for the
periods indicated therein, and have been prepared (except as
otherwise noted therein) on a consistent basis and in all
material respects in accordance with the provisions of the
Companies Act applicable to insurance companies and the
Statement of Recommended Practice on Accounting for
Insurance Business issued by the Association of the British
Insurers in May 1990. The Company Financials have been
audited by KPMG Peat Marwick, whose audit opinion states
that the Company Financials have been properly prepared and
comply with the requirements of the Companies Act
applicable to insurance companies. The Unaudited Financials
are derived from the books and records of the Company, fairly
present the financial position and results of operations of the
Company as at the date thereof and for the period indicated
therein, and have been prepared in order to accommodate the
consolidated financial reporting requirements of Seller and its
subsidiaries under United States generally accepted accounting
principles. While certain classification differences exist
between the Unaudited Financials and the Company
Financials, reserving practices (as indicated by unearned
premiums (net of deferred acquisition costs)) and outstanding
claims (including claims incurred but not reported) in the
Unaudited Financials and the Company Financials are
consistent in all material respects, and shareholders' funds in
the Unaudited Financials and the Company Financials are
computed on a consistent basis in all material respects, except
for unrealized appreciation of investments, which are reported
at amortized cost in the Unaudited Financials and at market
value in the Company Financials.
(c) Except as set forth on Schedule 3.8(c) or
otherwise indicated in the Company Financials, since the
Balance Sheet Date, there has not been any material change
by the Company in its Investment Policies (as defined below)
or financial, tax or accounting methods, principles or practices
(including any material change with respect to the
establishment of reserves for unearned premiums, reserves for
losses (including incurred but not reported losses) and loss
adjustment expenses, or any material change in depreciation
or amortization policies or rates). As used in this Agreement,
"Investment Policies" means the overall investment
policies used in the management of the Company's investment
portfolio, including the Company's policies with respect to
duration, liquidity, currency, asset allocation and asset quality.
SECTION 3.9. Annual Statements.
(a) Seller has delivered to Buyer and Parent
true, complete and correct copies of the returns of the
Company for the years ended December 31, 1992,
December 31, 1991 and December 31, 1990, together with all
exhibits and schedules thereto (the "Annual Statements"), as
furnished to the Department of Trade and Industry pursuant
to the Insurance Companies Act 1982 (the "Insurance
Companies Act"). Except as set forth on Schedule 3.9, the
information concerning the Company contained in the Annual
Statements was, at the time each such Annual Statement was
filed, true, complete and correct in all material respects.
(b) The Annual Statements (and all exhibits
and schedules thereto) have been audited and prepared and
reported upon in all material respects in accordance with
accounting practices prescribed or permitted for general
insurance companies in the United Kingdom, and such
accounting practices have been applied on a consistent basis
throughout the periods involved, except as expressly set forth
or disclosed in the notes, exhibits or schedules thereto or in
the Company Financials.
(c) All information in the Annual Statements
was prepared in compliance in all material respects with all
requirements of the Insurance Companies Act and the
regulations having effect for purposes of that Act. Except as
set forth on Schedule 3.9, all of the assets and liabilities of the
Company were reflected in the Annual Statements to the
extent permitted by, and were valued in accordance with,
Parts V and VI of the Insurance Companies Regulations 1981.
Since the Balance Sheet Date, no event has occurred or
circumstance has arisen such that the method or basis of
valuation of any of the Company's assets shown on the Annual
Statement for the year ended December 31, 1992 would be
required to be materially changed from the method or basis
adopted for the purposes of such Annual Statement.
SECTION 3.10. Absence of Certain Changes or
Events. Except as set forth on Schedules 3.10 or 3.14 or as
otherwise specifically contemplated by Sections 3.26 and 5.5,
since the Balance Sheet Date, the Company has conducted its
business only in the ordinary course consistent with past
practices, and there has not been:
(a) any damage, destruction or loss to any of
the properties of the Company, whether covered by insurance
or reinsurance or not, that has had a Material Adverse Effect;
(b) any declaration or payment or making of
any dividend or other distribution (whether in cash, securities
or other property or any combination thereof) in respect of
the capital of the Company, or any repurchase, redemption or
other acquisition by the Company of any of its capital, or any
proposal by the Company to effect any of the foregoing;
(c) any entry into any Contract with, or the
making of any assurance or undertaking to, any past or
present director, officer or employee of the Company or any
other Key Employee (as defined in Section 3.22) (each, an
"Employee") providing for his/her employment, any material
increase in salary or other regularly paid remuneration or any
increase in severance or termination benefits payable or to
become payable by the Company to any Employee, any
general increase in salaries of all or a substantial portion of
the Employees, or the exercise of any power or discretion to
materially augment or introduce benefits under any pension
scheme in respect of any present Employee (and any past
Employee, if the Company has any remaining obligations
thereunder) or the introduction of, or any material increase in
benefits under, any collective bargaining agreement or similar
Contract or in benefits under any bonus, pension, profit
sharing, deferred compensation, incentive compensation, share
ownership, share purchase, share option, profit sharing,
phantom stock, retirement, vacation, severance, disability,
death benefit, medical/health, insurance or other plan or
arrangement or understanding providing benefits to any
present Employee (and any past Employee, if the Company
has any remaining obligations thereunder) (collectively,
"Employee Benefit Plans");
(d) any loan or advance to any Employee, or
any Contract therefor, other than advances for travel and
other expenses in the ordinary course of business consistent
with past practice;
(e) any entry into any Contract or transaction
(including any borrowing, capital expenditure or capital
financing) by the Company material to the business,
operations, assets, liabilities or financial condition of the
Company, except Contracts or transactions in the ordinary
course of business consistent with past practice;
(f) any payments, distributions, management
fees or other compensation made to any Person (including
Seller and its Affiliates) under or in connection with any
Contracts (other than employment Contracts) relating to the
management or operation of the insurance and reinsurance
business of the Company (including the Underwriting
Management Agreement between the Company and UA
Management dated 6 February 1987); or
(g) any change in the business, operations,
assets, liabilities or financial condition of the Company, other
than seasonal changes in the business of the Company and
matters of a general economic nature that, in any case or in
the aggregate, would have a Material Adverse Effect.
SECTION 3.11. Contracts.
(a) As used in this Agreement, "Contract"
means any in-force contract, agreement, instrument,
commitment or other arrangement, written or unwritten,
including any deed, loan or credit agreement, note, bond,
mortgage, indenture or lease to which the Company is a party
or by which any of its material assets or properties is bound.
Schedule 3.11 contains a true, complete and correct list of the
following Contracts (each, a "Scheduled Contract") (true,
complete and correct copies (or, if none exist, written
descriptions) of which have been made available to Buyer
and/or Parent prior to the date of this Agreement):
(1) Contracts relating to the borrowing
of money, guarantees, security agreements, factoring
agreements and deferred purchase or hire purchase
Contracts, including obligations for reimbursement
under letters of credit or reimbursement agreements
therefor (other than letters of credit or reimbursement
agreements therefor that are (A) fully secured or
collateralized and (B) related to reinsurance Contracts
entered into by the Company in the ordinary course of
business consistent with past practice) in any case
representing future liabilities in excess of US $100,000;
(2) Contracts (other than Insurance
Arrangements) which permit a financial institution or
other Person to block or otherwise restrict the
Company's immediate access to deposits or other
monies held thereby, in any case involving amounts in
excess of US $100,000;
(3) Contracts with any Employee
pursuant to which the Company owes any monetary
obligation (other than those Contracts involving annual
payments in any case of less than US $50,000 or which
are cancelable by the Company on not more than
ninety (90) days' notice without cause or penalty);
(4) Contracts with insurance agents and
agencies, managing general agents with binding
authority, brokers, third party administrators and
consultants (other than those Contracts which are
cancelable by the Company on not more than
thirty (30) days' notice without cause or penalty),
provided that with respect to such Contracts with
managing general agents, Schedule 3.11 shall also set
forth (A) a brief description of each managing general
agent, including its jurisdiction of domicile, its address
of record and (where reasonably available) information
regarding the ultimate beneficial ownership thereof,
and (B) the aggregate amount of insurance which such
managing general agent has written and is authorized
to write on behalf of the Company;
(5) Contracts containing any provision or
covenant limiting the ability of the Company to engage
in any line of business or compete with any Person
(other than Contracts with insurance agents and
agencies or managing general agents with binding
authority entered into by the Company in the ordinary
course of business consistent with past practice);
(6) leases, subleases, rental or use
Contracts to which the Company is a party involving a
single annual payment in any case in excess of
US $50,000 or aggregate annual payments in excess of
US $250,000;
(7) Contracts with any trade union or
staff association or other body representing (or, to the
knowledge of Seller, purporting to represent) any
present Employee;
(8) Contracts between the Company and
its Affiliates (including in any event any reinsurance
Contracts with Accord Re Limited ("Accord") and the
50% quota share reinsurance Contract relating to the
so-called LMX business, but excluding other Insurance
Arrangements entered into by the Company with any of
its Affiliates);
(9) Contracts in which any Employee has
any monetary or other interest in any case in excess of
US $50,000;
(10) Contracts (other than Insurance
Arrangements) involving the sale, transfer, assignment
or other disposition of the Company's assets or
liabilities having a value in any case in excess of
US $100,000 pursuant to which the Company has given
representations and/or indemnities which continue to
be in effect or pursuant to which liability could
reasonably be expected to arise;
(11) investment management agreements, investment
custody agreements and similar Contracts (other than
Insurance Arrangements pursuant to which the Company has
(A) deposited funds with Governmental Authorities in order
to qualify as an approved or eligible excess and surplus
lines insurer or (B) pledged funds to secure obligations
under reinsurance Contracts);
(12) Contracts (other than Insurance
Arrangements) with each insurance agent (including
each managing general agent) or agency (the "Agency
Contracts") that individually produced US $250,000 or
more of gross written premiums for the Company
during the year ended December 31, 1992 or is
reasonably expected by the Company individually to
produce US $250,000 or more of gross written
premiums for the Company during the year ended
December 31, 1993 which are subject to termination
upon the occurrence of a change of ownership or
control of the Company;
(13) Contracts (other than the Scheduled
Contracts referred to in Section 3.11(a)(4), Agency
Contracts and Insurance Arrangements) representing
future liabilities in any case in excess of US $250,000
individually that are subject to termination upon the
occurrence of a change of ownership or control of the
Company, provided, that the aggregate future liabilities
for all Contracts (other than the Scheduled Contracts
referred to in Section 3.11(a)(4), Agency Contracts and
Insurance Arrangements) representing future liabilities
in any case of less than US $250,000 that are subject to
termination upon the occurrence of a change of
ownership or control of the Company and not listed on
Schedule 3.11 does not exceed US $1,000,000;
(14) Contracts pursuant to which the
Company has agreed to grant or has granted an option
or similar right to another Person affecting any asset of
the Company (other than assets held by the Company
in its investment portfolio); and
(15) all other Contracts (other than
Insurance Arrangements) material to the business,
operations, assets, liabilities or financial condition of
the Company in any case representing future liabilities
(to the extent reasonably ascertainable) in excess of
US $50,000 individually (other than those Contracts
which are cancelable by the Company on not more
than ninety (90) days' notice without cause or penalty)
and which are not listed on any other Schedule hereto.
(b) Except as set forth on Schedule 3.11, each
of the Scheduled Contracts is in full force and effect and is
binding upon and enforceable against the parties thereto in
accordance with their respective terms. The Company is not
in, or, to the knowledge of Seller, claimed to be in, breach or
default in any respect under any of the Scheduled Contracts
and there does not exist under any of the Scheduled Contracts
any event which, with the giving of notice or lapse of time,
would constitute a material breach or default by the Company.
To the knowledge of Seller, no other party to any of the
Scheduled Contracts is in or has claimed to be in breach or
default in any material respect thereunder.
SECTION 3.12. Litigation.
(a) Except as set forth on Schedule 3.12, there
is no claim, action, proceeding, arbitration, investigation,
inquiry, charge or complaint (excluding claims, actions,
proceedings, arbitrations, investigations, inquiries, charges and
complaints in the ordinary course of business under insurance
or reinsurance Contracts where the damage alleged or remedy
requested in any case is less than US $50,000) before or by
any Governmental Authority or any private arbitration
tribunal (collectively, "Litigation") now pending, or to the
knowledge of Seller threatened, against or relating to the
Company or any director or officer of the Company (in
his/her capacity as such) or the assets, properties or business
of the Company, or the transactions contemplated by the
Transaction Documents or which questions the validity or
enforceability of any of the Transaction Documents or any
action taken or to be taken by Seller or any of its Affiliates in
connection with the Transaction Documents. To the
knowledge of Seller, there is no fact or circumstance
(including any act or omission) which is reasonably likely to
give rise to such a claim.
(b) Except as set forth on Schedule 3.12,
neither the Company nor any of its directors or officers (in
his/her capacity as such) is subject to any permanent,
preliminary or temporary injunction or prohibitive order,
judgment or decree of any Governmental Authority (including
any action taken by the Secretary of State for Trade and
Industry under sections 38 to 45 of the Insurance Companies
Act).
SECTION 3.13. Liabilities and Reserves.
(a) Except as set forth on Schedule 3.13(a), the
balance sheet included in the Unaudited Financials reflects
full provision (on an undiscounted basis) for all obligations
and liabilities of the Company at March 31, 1993 on a basis
consistent with the Company Financials and in accordance
with the requirements of all relevant statements of standard
accounting practice and/or financial reporting standards issued
or adopted by the Accounting Standards Board
("UK Accounting Standards"). Except to the extent
specifically disclosed, reflected or reserved against in such
balance sheet and the notes thereto, the Company does not
have any material obligations or liabilities of any nature
(whether accrued, absolute, contingent or otherwise, and
whether or not due, or arising out of transactions entered into,
or any state of facts existing, prior to such date), other than
liabilities incurred since March 31, 1993 in the ordinary course
of business consistent with past practice.
(b) By reference to the facts now existing, the
directors of the Company could now properly give a certificate
in the form prescribed by Schedule 6, Part I of the Insurance
Companies (Accounts and Statements) Regulations 1983
without qualification, amplification or explanation, and
without the exclusions provided for in paragraph 8 of Part I of
such regulations.
(c) The reserving and valuation bases adopted
by the Company in preparing the Company Financials, the
Unaudited Financials and the Annual Statements apply levels
of prudence which are not less than those generally accepted
for similar companies carrying on insurance business in the
United Kingdom.
(d) Prior to the date of this Agreement, Seller
has furnished Buyer and Parent true, complete and authentic
copies of (1) the "Report by KPMG Actuarial Service dated
(30 September 1992) in respect of Company's Loss Reserves
at 30 June 1992" (the "KPMG Report") and (2) the
information described on Schedule 3.13(d), which information
constitutes all of the information provided to KPMG Actuarial
Service by Seller and/or its Affiliates in connection with the
preparation of the KPMG Report. No other external study of
the Company's loss reserves or loss adjustment expense
reserves has been prepared during the five (5) year period
immediately preceding the date of this Agreement other than
in connection with the preparation of the audited financial
statements of the Company. Buyer and Parent acknowledge
that the Seller is making no representation or warranty with
respect to the contents of the KPMG Report and Seller
expressly disclaims the contents of such report. Buyer and
Parent represent and warrant that they are not relying on the
KPMG Report in any respect.
SECTION 3.14. Taxation. The representations
and warranties contained in this Section 3.14 are given subject
to the matters disclosed in Schedule 3.14 and to any relevant
provisions of the Tax Indemnification Agreement.
(a) Definitions. The following terms shall have
the following meanings for purposes of this Agreement and
Schedule 3.14:
(1) "Event" means the winding up or
dissolution of any Person, and any act, transaction or
omission whatsoever, and any reference to an event
occurring on or before a particular date shall include
events which for Tax purposes are deemed to have, or
are treated or regarded as having, occurred on or
before that date.
(2) "Group Relief" means: (A) Relief
surrendered or claimed pursuant to Chapter IV of
Part X of the Taxes Act; (B) advance corporation tax
surrendered or claimed pursuant to section 240 of the
Taxes Act; and (C) any Tax refund surrendered or
claimed pursuant to section 102 of the Finance Act of
1989 of the United Kingdom.
(3) "Relief" means, unless the context
otherwise requires, any allowance, credit, deduction,
exemption or set-off in respect of any Tax or relevant
to the computation of any income, profits or gains for
the purposes of any Tax; and (A) any reference to the
"use" or "set off" of Relief shall be construed
accordingly and shall include use or set off in part; and
(B) any reference to the "loss" of a Relief shall include
the absence or non-existence of any such Relief, or to
such Relief being available only in a reduced amount.
(4) "Tax" means corporation tax, advance
corporation tax, income tax (including income tax or
amounts on account of income tax required to be
deducted or withheld from or accounted for in respect
of any payment), capital gains tax, development land
tax, inheritance tax, VAT, national insurance
contributions, capital duty, stamp duty, stamp duty
reserve tax, duties of customs and excise, petroleum
revenue tax, local authority rates and charges, all taxes,
duties or charges replaced by or replacing any of them,
and all other taxes or similar impost on gross or net
income, profits or gains, distributions, receipts, sales,
use, occupation, franchise, value added and personal
property, taxes on premiums (whether calculated on the
gross or net amount thereof), and all levies, imposts,
duties, charges or withholdings of any nature
whatsoever chargeable by any Tax Authority, and any
payment whatsoever which the Company may be or
become bound to make to any Person as a result of the
discharge by that Person of any Tax which the
Company has failed to discharge, together with all
penalties, charges and interest relating to any of the
foregoing or to any late or incorrect return (or failure
to file such return or other form or statement) in
respect of any of them, and regardless of whether any
such taxes, levies, duties, imposts, charges, withholdings,
penalties and interest are chargeable directly or
primarily against or attributable directly or primarily to
the Company or any other Person and of whether any
amount in respect of any of them is recoverable from
any other Person.
(5) "Tax Authority" means any taxing or
other authority (whether within or outside the United
Kingdom, including the United States or any State)
competent to impose any Tax liability.
(6) "Taxes Act" means the Income and
Corporation Taxes Act 1988.
(7) "VAT" means value added tax, being
the Tax created and administered by and according to
the VAT Legislation.
(8) "VAT Legislation" shall include the
Value Added Tax Act 1983, the Finance Act 1985 and
all other enactments in relation to VAT and all notices,
provisions and conditions made or issued thereunder,
including the terms of any agreement reached with
HM Customs & Excise or any concession disclosed to
Buyer and Parent in writing prior to the date of this
Agreement.
(9) Any reference to income, profits or
gains "earned", "accrued" or "received" on or before a
particular date or in respect of a particular period shall
include income, profits or gains which for Tax purposes
are deemed to have been or are treated or regarded as
earned, accrued or received on or before that date or
in respect of that period.
(10) Any reference to something
occurring (including a Tax liability arising) "in the
ordinary course of business" shall, without prejudice to
the generality thereof, be deemed not to include:
(A) anything which results in the
Company receiving a valid Tax claim in respect
of any liability to Tax of, or properly attributable
to, another Person (other than the Company);
(B) anything which relates to or
involves the acquisition or disposal of an asset
or the supply of services (including the lending
of money, or the hiring or licensing of tangible
or intangible property) in a transaction which is
not entered into on arm's length terms;
(C) anything which relates to or
involves the making of a distribution for Tax
purposes, the creation, cancellation or
reorganization of share or loan capital, the
creation, cancellation or repayment of any intra-
group debt or any company becoming or ceasing
or being treated as ceasing to be a member of a
group of companies or as becoming or ceasing
to be associated or connected with any other
company for any Tax purposes; or
(D) anything which relates to a
transaction or arrangement which includes, or a
series of transactions or arrangements which
includes, any step or steps having no commercial
or business purpose apart from the reduction,
avoidance or deferral of a Tax liability.
(11) Persons shall be treated as
"connected" for the purposes of this Section 3.14 if they
are connected within the meaning of section 839 of the
Taxes Act.
(12) References to any provision of an
enactment include any provision re-enacted by such
provision.
(b) General/Compliance.
(1) All material liabilities, whether
actual, deferred, contingent or disputed, of the
Company for Tax measured by reference to income,
profits or gains earned, accrued or received (or
premiums earned, accrued or received) on or before
the Balance Sheet Date, or arising in respect of an
Event occurring or deemed to occur on or before the
Balance Sheet Date, are provided for or (as
appropriate) disclosed in the Company Financials for
the year ended December 31, 1992 (the "1992 Company
Financials") in accordance with UK Accounting
Standards and the accounting policies set out in the
1992 Company Financials. All other warranties relating
to specific Tax matters set out in this Section 3.14 are
made without prejudice to the generality of the
foregoing.
(2) Since the Balance Sheet Date:
(A) the Company has not been
involved in any transaction which has given or
may give rise to a liability to Tax on the
Company (or would have given or might give
rise to such a liability but for the availability of
any Relief) other than Tax in respect of
transactions entered into by it in the ordinary
course of business;
(B) no accounting period (as
defined in section 12 of the Taxes Act) of the
Company has ended as referred to in
section 12(3) of the Taxes Act; and
(C) the Company has not been a
party to, nor has it or any of its assets or
properties been subject to, any tax sharing
agreement or arrangement with any Person
effective for any tax year subsequent to the
financial year ended December 31, 1992; and
since the Balance Sheet Date, the Company has
not made, nor is it liable for, any payments or
other compensation for any such tax sharing
agreement or arrangement, other than payments
to be made to Affiliates pursuant to this
Agreement or the Tax Indemnification
Agreement.
(3) The Company has duly, and within
any appropriate time limits, made all returns, given all
notices and supplied all other forms, statements and
information (each, a "Return") required to be supplied
to all relevant Tax Authorities. All such Returns were
and remain, to the knowledge of Seller, true, complete
and correct in all material respects and were made on
a proper basis and do not, and to the knowledge of
Seller are not likely to, reveal any transactions which
may be the subject of any dispute with any Tax
Authority. The Company is neither involved in any
current dispute with any Tax Authority nor is it (nor
has it in the last seven (7) years been) the subject of
any investigation, audit or non-routine visit by any Tax
Authority. The Company has not been informed of any
planned investigation, audit or non-routine visit by any
Tax Authority and, to the knowledge of Seller, there
are no facts which are likely to cause such an
investigation, audit or non-routine visit to be instituted
in respect of the Company. Within the past seven (7)
years, neither the Company nor, to the knowledge of
Seller, any director or officer of the Company (in
his/her capacity as such) has paid or become liable to
pay, and to the knowledge of Seller there are no
circumstances by reason of which it or they may
become liable to pay, to any Tax Authority, any
penalty, fine, surcharge or interest in respect of any Tax
(including in respect of any failure to make, give or
supply any Return to any relevant Tax Authority, or
any failure to pay Tax on the due date for payment).
(4) No transaction in respect of which
any ruling, consent or clearance (each, a "Tax
Clearance") was required or sought from any Tax
Authority has been entered into or carried out by the
Company without a Tax Clearance having first been
properly obtained, and all information supplied to any
Tax Authority or other appropriate authority in
connection with any such Tax Clearance fully and
accurately disclosed all facts and circumstances material
to the giving of the Tax Clearance. Any transaction for
which a Tax Clearance was obtained has been carried
out only in accordance with the terms of such Tax
Clearance and the application on which the Tax
Clearance was based and at a time when the Tax
Clearance was valid and effective. To the knowledge
of Seller, no facts or circumstances have arisen since
any such Tax Clearance was obtained which would
cause the Tax Clearance to become invalid or
ineffective.
(5) No Tax Authority has operated or
agreed to operate any special arrangement (being an
arrangement which departs from any relevant
legislation or any published practice or concession) in
relation to the Company's affairs.
(6) The Company has not made, nor is
there in effect with respect to the Company, an election
pursuant to sections 953(c)(3)(C) or 953(d) of the
United States Internal Revenue Code of 1986, as
amended (the "IRC"). The Company has not been, and
has no reason to believe that it will be, characterized as
a "passive foreign investment corporation" (as defined
in Section 1291 et seq. of the IRC).
(7) Prior to the date of this Agreement,
Seller has disclosed to Buyer and Parent full details of
the rights of the Company to make any claim for Relief
or any election for a basis or method of Tax or type of
Relief and any rights to make an appeal against an
assessment or an application for postponement of any
Tax, which have not been exercised or which have been
notified to a Tax Authority but where the Company's
claim or notification has not been finally accepted and
which (in each case) were taken into account in
preparing the provisions for Tax or deferred Tax in the
1992 Company Financials. To the knowledge of Seller,
the Company is not, nor will it become, liable to pay,
or make reimbursement or indemnity in respect of, any
Tax in consequence of the failure by any other Person
to discharge that Tax within any specified period or
otherwise, where such Tax relates to income, profits or
gains, earned, accrued or received (or premiums
earned, accrued or received), or to any Event or
circumstance occurring or arising or deemed to occur
or arise (whether wholly or partly) prior to the Closing.
No Relief has been claimed by and/or given to the
Company and/or taken into account in determining or
eliminating any provision for Tax or deferred Tax in
the 1992 Company Financials, which, to the knowledge
of Seller, is not validly available to the Company and
Seller is not aware of (or, if it is aware of, has fully
disclosed to Buyer) any challenge made by, or grounds
for a challenge available to, a Tax Authority in relation
thereto.
(8) To the knowledge of Seller, the
Company has made all deductions and retentions of or
on account of Tax as it was or is obliged or entitled to
make, and all such payments of or on account of Tax as
should have been made to any Tax Authority in respect
of such deductions or retentions.
(c) Employees/Pensions. All United Kingdom
National Insurance contributions and sums payable to the
Inland Revenue under P.A.Y.E. system and any amounts of a
corresponding nature payable to any foreign Tax Authority
due and payable by the Company up to the date hereof have
been paid, and, to the knowledge of Seller, the Company has
made all such deductions and retentions as should have been
made under section 203 of the Taxes Act and all regulations
made thereunder or under any comparable laws or regulations
of any relevant foreign jurisdiction, including United States
Federal and State wage withholding, Social Security and other
similar systems. The Company has not adopted and does not
operate, and is not part of, any scheme approved, or for which
approval has been or is to be sought, under section 202 of the
Taxes Act (charities: payroll deduction scheme) or
Chapter III of Part V of the Taxes Act (profit related pay).
Since the Balance Sheet Date, no payment has been made to
the Company to which section 601 of the Taxes Act applies
(pension scheme surpluses: payments to employers).
(d) Capital Gains and Other Realization
Proceeds. If the Company had disposed of the investments
referred to in Note (6) to the 1992 Company Financials for
their market value as taken into account for the said Note (6),
the liability to Tax which would arise thereby (leaving out of
account any Reliefs etc. available to the Company) would not
exceed the provision for deferred Tax arising on unrealized
gains on investments (US $2,294,000) contained in the 1992
Company Financials. Upon the Closing or the execution and
delivery of this Agreement or otherwise as a result of any
matter contemplated by this Agreement, the Company will not
incur any liability pursuant to section 178 or 179 of the
Taxation of Chargeable Gains Act 1992 of the United
Kingdom.
(e) Group Relief.
(1) Seller has disclosed to Buyer and
Parent in writing prior to the date of this Agreement
full, accurate and complete details of all arrangements
or agreements to which the Company is a party or
which in any way affect the Company and which relate
to Group Relief and of any such arrangements or
agreements under which any claim could be made by
any Person either for the surrender to it by or by it to
the Company of Group Relief or for the making or
repayment of any payment in relation to Group Relief.
Seller also has disclosed full details of all claims made
(whether agreed with the Inland Revenue or not) for
the surrender by or to the Company of Group Relief
and of any such claims intended to be so made or
which were taken into account or assumed in preparing
the Company Financials and of the terms of any
arrangements or agreements pursuant to which such
surrenders were or are to be or were assumed to be
made.
(2) The Company is not a dual
resident investing company within the meaning of
section 404 of the Taxes Act. The Company is not, and
at no time within the seven (7) years immediately
preceding the date of this Agreement has been, a close
company as defined in section 414 of the Taxes Act.
(f) Distributions, etc. The Company has not on
or after April 6, 1965: (1) made any distribution or deemed
distribution within the meanings of section 209, 210 or 418 of
the Taxes Act (distributions and deemed distributions) except
as provided for in its audited accounts; (2) repaid, redeemed
or purchased or agreed to repay, redeem or purchase any of
its share capital; or (3) capitalized or agreed to capitalize in
the form of shares or debentures any profits or reserves of any
class or description, or otherwise issued or agreed to issue
share capital otherwise than for new consideration (as defined
in section 254 of the Taxes Act). The Company has not been
concerned in any exempt distribution within section 213 of the
Taxes Act within the seven (7) years immediately preceding
the date of this Agreement (demergers: exempt distributions).
The Company has not issued any share capital which is of a
relevant class as defined in section 249(2) of the Taxes Act.
The Company has not issued any security (as defined in
section 254(1) of the Taxes Act) outstanding on Closing in
circumstances such that any interest or other payment payable
in respect of it may be treated as a distribution under
section 209 of the Taxes Act, and has not agreed to issue any
such security.
(g) Controlled Foreign Companies. The
Company has not received any notice of the making of a
direction under section 747 of the Taxes Act and no
circumstances exist which would entitle the Inland Revenue to
make such a direction and to apportion to the Company any
profits of a controlled foreign company pursuant to
section 752 of the Taxes Act.
(h) Company Residence, Treasury Consents and
Migration. The Company is and has at all times in the seven
(7) years immediately preceding the date of this Agreement
been accepted by the UK Inland Revenue as resident in the
United Kingdom for Tax purposes and is not and has not
been treated for the purposes of any double taxation
arrangements having effect by virtue of section 788 of the
Taxes Act or for any other Tax purpose as resident in any
other jurisdiction (including the conduct of the affairs of the
Company so as to be engaged in a United States trade or
business through a permanent establishment within the
meaning of Article 5 of the Convention Between the
Government of the United States of America and the
Government of the United Kingdom of Great Britain and
Northern Ireland for the Avoidance of Double Taxation and
the Prevention of Fiscal Evasion with Respect to Taxes on
Income and Capital Gains), nor is the Company nor has it
been directly subject to Tax in any other jurisdiction, except
for United States Federal excise taxes imposed under section
4371 et seq. of the IRC in the circumstances described in
Schedule 3.14. The Company has not carried out or caused or
permitted to be carried out any of the transactions specified at
the relevant time in section 765(1) of the Taxes Act otherwise
than with the prior consent of HM Treasury (and, in the case
of a special consent, full particulars of which have been
disclosed to Buyer and Parent in writing prior to the date
hereof; and any conditions subject to which such consent was
given have been complied with in full) or specified at the
relevant time in section 765A of the Taxes Act without having
duly provided the required information to the Inland Revenue.
(i) Value Added Tax.
(1) This Section 3.14(i) shall apply, with
appropriate modifications, to any equivalent sales or
turnover tax in any jurisdiction other than the United
Kingdom to which the Company is subject.
(2) The Company:
(A) is registered for the purposes
of VAT, has been so registered at all times that
it has been required to be registered by VAT
Legislation, and such registration is not subject
to any conditions imposed by or agreed with
HM Customs & Excise; and has complied fully
with and observed in all material respects the
terms of VAT Legislation;
(B) has maintained and obtained
all the records, invoices and other documents (as
the case may be) required by the VAT
Legislation and has preserved such records,
invoices and other documents in such form and
for such periods as are required by VAT
Legislation;
(C) has disclosed to Buyer in
writing (i) full details of any method approved
or directed for use by the Company by the
Commissioners of Customs & Excise under
regulation 31 of the Value Added Tax (General)
Regulations 1985 (SI 1985/886 as amended) or
under regulation 30(5) of such Regulations as in
force before the substitution effected by the
Value Added Tax (General) (Amendment)
Regulations 1992 (SI 1992/645) and which
continues in force and effect whether by specific
agreement with such Commissioners or
otherwise and (ii) the average percentage input
tax recovery obtained by the Company in the
last eight (8) prescribed accounting periods
ending before the date of this Agreement
(prescribed accounting period having the
meaning ascribed to that expression by
regulation 58 of the said Regulations of 1985);
(D) is a member of a group for
VAT purposes but is not the representative
member of that group;
(E) is not required to make
payments on account of VAT for which it may
become liable in a prescribed accounting period
(pursuant to The Value Added Tax (Payments
on Account) Regulations 1992); and
(F) is not and has not been
subject under VAT Legislation to any penalty
liability notice, written warning of failure to
comply, surcharge liability notice or requirement
to give security as a condition of making taxable
supplies.
(3) In respect of each of the assets of the
Company (if any) which is a capital item for the
purpose of Part VA of the Value Added Tax (General)
Regulations 1985, Seller has disclosed to Buyer and
Parent in writing, prior to the date of this Agreement,
full details of the capital item affected, the amount of
the total input tax (within the meaning of such
Regulations) which is subject to adjustment, the
percentage of the total input tax which was reclaimable
on the capital item in the first interval applicable to it
and any adjustments made or to be made having regard
to Events occurred up to the date of this Agreement,
the date of acquisition of the capital item and the
number of intervals in the adjustment period remaining
from the date of this Agreement, and full details of all
matters to date relevant in determining any
adjustments.
(j) Stamp Duties. All documents in the
possession or under the control of the Company or to the
production of which the Company is entitled which establish
or are necessary to establish the title of the Company to any
asset have been duly stamped and any applicable stamp duties
or charges in respect of such documents have been duly
accounted for and paid, and no such documents which are
outside the United Kingdom would attract stamp duty if they
were brought into the United Kingdom.
SECTION 3.15. Assets.
(a) Investments. (1) Schedule 3.15(a)(1) sets
forth a true, complete and correct list of all securities,
mortgages and other investments, including those held by
Accord under its reinsurance Contracts with the Company
(collectively, the "Investments"), owned by the Company on
June 30, 1993, together with the date of purchase, cost basis
and book value thereof as of June 30, 1993. Except as set
forth on Schedule 3.15(a)(1), the Company has good and
marketable title to all the Investments listed on
Schedule 3.15(a)(1) or acquired in the ordinary course of
business since June 30, 1993 (in each case, other than with
respect to those Investments disposed of in the ordinary
course of business consistent with past practice since June 30,
1993) (collectively, the "Scheduled Investments"). As of June
30, 1993, none of the Scheduled Investments is in default in
the payment of principal or interest and, except as disclosed
on Schedule 3.15(a)(1), the ratings assigned to each of the
Scheduled Investments that are rated by a rating agency have
not been lowered or downgraded since March 31, 1993.
There are no Liens on any of the Scheduled Investments,
except as set forth on Schedule 3.15(a)(1).
(2) Schedule 3.15(a)(2) sets forth a true,
complete and correct list, as of June 30, 1993, of all sales,
purchases, exchanges or other transactions in or affecting the
Company's investment portfolio since the Balance Sheet Date.
(b) Real Property. Other than the Greenwich
View Place property (all of the rights and interests in which
will be transferred out of the Company as a result of the
execution and delivery of the Greenwich View Transfer
Documents), the Company does not own any right or interest
in any land or buildings. Other than the agreement for lease
and the license for the Company's current office space located
at 77 Gracechurch Street and 85 Gracechurch Street,
respectively, the Company is not actually or contingently liable
as an original contracting party to, or as guarantor of any
party to, or otherwise contractually liable in respect of, any
lease or leasehold property or license connected therewith.
(c) Other Property. Except as otherwise set
forth on Schedule 3.15(c), the Company has good and
marketable title to or valid leasehold or license interests in all
property and other assets (including all tangible personal
property and assets but excluding Investments and real
property, because they are covered by Sections 3.15(a) and
3.15(b), respectively) reflected in the Company Balance Sheet
and all other properties or assets (including the assets
acquired by the Company in the Unionamerica
Reorganization (as defined in Section 3.27) which, individually
or in the aggregate, are material to the operation of the
Company (other than that disposed of in the ordinary course
of business consistent with past practice prior to the date
hereof) (all such properties and assets being referred to
collectively as the "Material Properties"). Except as otherwise
set forth on Schedule 3.15(c), the Company owns each of the
Material Properties free and clear of all Liens other than (A)
Liens reflected in the Company Financials, (B) Liens for taxes
not yet due and payable or which are being contested in good
faith by appropriate proceedings (for which provisions or
reserves have been made by the Company to the extent
required by UK Accounting Standards) and (C) Liens which
do not materially impair the value or interfere with the use of
the properties affected thereby.
SECTION 3.16. Compliance with Laws, etc.
(a) Except as set forth on Schedule 3.16, the
Company is in compliance with all United Kingdom, United
States Federal, State, local or foreign judgments, orders,
injunctions, laws, statutes, regulations and ordinances, and all
licenses, approvals and permits issued by any Governmental
Authority, applicable to it or any of its properties, assets,
operations or business, except where the failure of the
Company to be so in compliance would not in any case or in
the aggregate have a Material Adverse Effect. Without
prejudice to the generality of the foregoing, the Company and
its directors and officers (in their capacities as such) have
complied in all material respects with all their respective
obligations under the Insurance Companies Act and there are
no matters arising from such compliance which are the subject
of any dispute with the Department of Trade and Industry.
(b) The Company has filed or otherwise
provided all material reports, data, statements, documents,
applications, registrations, filings or submissions required to be
filed with or otherwise provided to any Governmental
Authority with jurisdiction over the Company or its business
or operations. All such filings complied with applicable laws
and regulations in all material respects. The Company has
not received written notice of any material deficiencies
asserted by any Governmental Authority with respect to any
such filings which have not been cured or otherwise resolved
to the satisfaction of such Governmental Authority and, except
as otherwise disclosed on Schedule 3.16, there have been no
material disputes or controversies with, or investigations
undertaken by, any such Governmental Authority with respect
to the Company or its business or operations.
SECTION 3.17. Insurance for Company's
Operations. Schedule 3.17 contains a true, complete and
correct list of all liability, property and casualty, employee
liability, directors and officers liability, surety bonds, key man
life insurance and other similar insurance Contracts that
insure the business, properties, operations or affairs of the
Company or affect or relate to the ownership, use or
operations of the Company's assets or properties and the
amount of coverage under each such insurance Contract. All
premiums due on all such insurance Contracts have been paid,
no notice of termination of any such insurance Contract has
been received and, to the knowledge of Seller, all such
insurance Contracts are in full force and effect.
SECTION 3.18. Insurance Business. The
Company possesses all licenses, certificates of authority, excess
and surplus lines eligibilities, permits, orders, approvals or
other authorizations (each, a "Permit") required to transact or
accept insurance or reinsurance in or from all jurisdictions in
or from which the Company now transacts or accepts
insurance or reinsurance (including jurisdictions in which
CRC(UK) transacted or accepted insurance or reinsurance
which has been assumed by the Company), except where the
failure to possess a Permit would not in any case or in the
aggregate have a Material Adverse Effect. All such Permits
are in full force and effect, except where the failure of any of
the Permits to be in full force and effect would not in any
case or in the aggregate have a Material Adverse Effect.
Neither the Company nor any of its Affiliates has received any
notice of any event, inquiry, investigation or proceeding that
could reasonably be expected to result in the suspension,
revocation, non-renewal or limitation of any such Permit or
the imposition of any restrictions or requirements with respect
thereto and, to the knowledge of Seller, there is no
sustainable basis that could reasonably be expected to result in
any such suspension, revocation, non-renewal or limitation or
the imposition of any restrictions or requirements with respect
thereto, except where the suspension, revocation, non-renewal
or limitation of a Permit or the imposition of any restrictions
or requirements with respect thereto would not in any case or
in the aggregate have a Material Adverse Effect.
SECTION 3.19. Reinsurance. Schedule 3.19
contains a true, complete and correct list of all Contracts
pursuant to which the Company has ceded insurance or
reinsurance of more than US $15,000 of liabilities in any
single case or more than US $50,000 of liabilities in the
aggregate to any single reinsurer or retrocessionaire (each a
"Reinsurance Agreement"). Schedule 3.19 sets forth, with
respect to each such reinsurer and retrocessionaire: (a) where
reasonably available to the Company, the name and
jurisdiction of domicile of such reinsurer or retrocessionaire;
(b) the amounts due in respect of such reinsurer's or
retrocessionaire's Reinsurance Agreements; (c) whether the
Company or, to the knowledge of Seller, such reinsurer and
retrocessionaire is in default under any such Reinsurance
Agreements; and (d) any funds withheld or letters of credit or
other security provided pursuant to or in connection with such
Reinsurance Agreement. To the knowledge of Seller and
except as set forth on Schedule 3.12, each of the Reinsurance
Agreements is valid and binding in all material respects in
accordance with its terms; provided, however, that,
notwithstanding anything contained in any of the Transaction
Documents, Seller makes no further representation as to the
collectibility of any amounts due under any of the Reinsurance
Agreements. Schedule 3.19 also sets forth a true, correct and
complete copy of the Company's most recent aged reinsurance
balances receivables report prior to the date of this
Agreement, which discloses all receivables overdue under the
terms of the Reinsurance Agreements as of the date of such
report. Except as set forth on Schedule 3.19, none of the
Reinsurance Agreements contains any provision providing that
the other party thereto may terminate such Reinsurance
Agreement by reason of the transactions contemplated by this
Agreement. The Company is entitled to take full credit
(without any requirement to provide against future payments
of premium) in its statutory financial statements for
reinsurance, coinsurance or excess insurance ceded pursuant
to such Reinsurance Agreements under applicable insurance
laws.
SECTION 3.20. Service Marks, Trademarks,
Intellectual Property, etc.
(a) Schedules 3.20(a)(1) and 3.20(a)(2) set forth
true, complete and correct lists (including the current status of
any registrations) of all foreign and domestic patents,
trademarks, service marks, trade names, corporate and
assumed names, design rights, copyrights (excluding rights in
computer software other than those items of computer
software set forth in Schedule 3.20(a)(2)), copyright
registrations and applications therefor, rights in know-how and
other intangible and intellectual property rights of any kind
that are material to the business or operation of the Company,
in each case whether registered or unregistered and including
applications for the grant of any of the foregoing and all rights
or forms of protection having equivalent or similar effect to
any of the foregoing which may subsist anywhere in the world
(each, an "Intellectual Property Right"), in each case held or
beneficially owned by, licensed to or registered in the
Company or used in its business. At the Closing, pursuant to
the Assignment of Trademarks or otherwise, the Company will
have vested in it all right and title to use the word
"Unionamerica" in respect of the business of the Company to
the extent that Seller and its Affiliates (including the
Company) have such rights as of the date of this Agreement.
No registrations have been sought or obtained with respect to
the word "Unionamerica" in any countries in the world other
than those set out in the Assignment of Trademarks. Except
as set forth on Schedule 3.20(a)(1), (1) the Company is the
sole owner, or has a valid and effective license or otherwise
has the right to use, all of the Intellectual Property Rights and
(2) the Company has the right to use, free and clear of any
royalty or other payment obligations, claims of infringement or
Liens, all Intellectual Property Rights that are material to the
conduct of its business. With respect to the software set forth
on Schedule 3.20(a)(2), and except as otherwise set forth on
such Schedule, either UA Management or the Company or
one of its Affiliates is the sole owner, or has a valid and
effective license or otherwise has the right to use (free and
clear of any royalty or other payment obligations, claims of
infringement or Liens), all of such software. The Company
has made all material payments and performed all of its other
material obligations and covenants in connection therewith
and the representations and warranties of the Company to the
licensors and sublicensors thereof were materially true and
correct when made.
(b) Except as set forth on Schedule 3.20(a)(1),
(1) the Company has not been charged and has not received
any claim or charge (written or, to the knowledge of Seller,
oral), and to the knowledge of Seller there is no basis for any
such claim or charge, with respect to the infringement
(whether in the past or as an ongoing matter) of any
unexpired patent, trademark, trade name, service mark or
design, copyright, copyright registration or other proprietary
right of any Person (including Seller and its Affiliates) and (2)
to the knowledge of Seller, the Company has not made
unlicensed use of confidential information. No act has been
done or omitted to be done, and no event has occurred or to
the knowledge of Seller is reasonably likely to occur, which
may render any of the Intellectual Property Rights subject to
revocation, compulsory license, cancellation or amendment or
may prevent the grant or registration of a valid intellectual
property right pursuant to a pending application. To the
knowledge of Seller, no Person other than the Company (and
other Affiliates of Seller to the extent set forth on Schedule
3.20(a)(1)) uses any of the service marks listed on Schedule
3.20(a)(1) and no Person has disputed the right of the
Company to use without restriction any such service marks.
No Intellectual Property Rights owned or used by the
Company and no use by or license for use granted to the
Company will be lost, or rendered liable to any right of
termination by any Persons, by reason of the transactions
contemplated by this Agreement.
(c) All the records and systems (including
computer systems) and all data and information of the
Company are recorded, stored, maintained or operated or
otherwise held by the Company (or by Seller or its Affiliates
for the benefit of the Company), free from any Lien.
SECTION 3.21. Employee Benefit Plans.
(a) Except as otherwise disclosed on
Schedule 3.21, none of the Employees is a member or
proposing to become a member of, and the Company is not a
party to, any share incentive scheme, share option scheme or
profit sharing, bonus or other such incentive scheme.
(b) Except with respect to the Unionamerica
Scheme (as defined below) (and except as otherwise disclosed
in Schedule 3.21), Seller has no obligation (whether
contractual or otherwise) or intention to pay or provide for
any "relevant benefits" within the meaning of Section 612 of
the Taxes Act or any disability insurance or permanent health
insurance.
(c) No changes in or augmentation of the
benefits currently provided under the Unionamerica Scheme
have been announced by any Person or are being considered
by Seller or the Company or the trustees of the Unionamerica
Scheme or the principal company of the Unionamerica
Scheme.
(d) True, complete and correct information
regarding the Unionamerica Scheme (as in effect on June 30,
1993) has been disclosed to Buyer and are set out in Schedule
3.21 and no changes have been made to the Unionamerica
Scheme since such date.
(e) The Company participates in the
Unionamerica Scheme. All companies participating in the
Unionamerica Scheme have been properly admitted to
participate therein and participate therein on the same terms
as apply to all other participating employers.
(f) True, complete and correct copies of the
Trust Deed and Rules and other documents containing the
provisions currently governing the Unionamerica Scheme,
along with true, complete and correct information regarding
the benefits and entitlements thereunder, have been delivered
to Buyer as well as a current membership list, and the
Company (except as otherwise disclosed on Schedule 3.21) has
no liability (including any liability connected with the making
of transfer payments by the Unionamerica Scheme) to any
Person in respect of or connected with the membership or
former membership in the Unionamerica Scheme of any
Person other than as revealed in such documents and
information. The information which has been made available
to Buyer is true, complete and correct and fairly presented;
and to the extent that it related to the assets or membership
data of the Unionamerica Scheme at a particular date, there
has been no material adverse change in the Unionamerica
Scheme, except as disclosed to Buyer's Actuary.
(g) True, complete and correct copies of the
latest actuarial valuation report and of the latest accounts to
the Unionamerica Scheme have been delivered to Buyer.
(h) The Unionamerica Scheme is an "exempt
approved scheme" (within the meaning of Chapter I of the
Part XIV of ICTA 1988) and has at all times complied with
and been administered in accordance with all applicable laws,
regulations and requirements, including the requirements of
the Inland Revenue for continued approval as an exempt
approved scheme and of trust law; and there is not and never
has been an appropriate contracting-out certificate (within the
meaning of Section 3 of the Social Security Pensions Act
1975) in force in respect of the Unionamerica Scheme. There
is no reason why approval of the Unionamerica Scheme by the
Board of Inland Revenue should be withdrawn or cease to
apply.
(i) To the knowledge of Seller, there is no
dispute with regard to the benefits payable under the
Unionamerica Scheme and no legal proceedings by or against
the trustees of the Unionamerica Scheme in their capacity as
such are pending, threatened or expected, and to the
knowledge of Seller there is no fact or circumstance likely to
give rise to any such proceedings.
(j) No refund of assets or monies to any
employer participating in the Unionamerica Scheme has been
or is proposed to be made.
(k) The Company, the trustees and the
administrator of the Unionamerica Scheme have each duly
complied with all their obligations and duties (including
statutory obligations) under and in respect of the
Unionamerica Scheme; all amounts due to the trustees of the
Unionamerica Scheme and to any insurance company in
connection with the Unionamerica Scheme have been paid;
and there are no material actions, suits or claims pending or
threatened in respect of the Unionamerica Scheme (other
than routine claims for benefits).
(l) The Company (except as otherwise
disclosed on Schedule 3.21) has no obligation or liability
(actual or contingent, present or future) to contribute to any
personal pension scheme (as defined in section 630 of the
Taxes Act) in respect of any of its Employees.
SECTION 3.22. Directors, Officers and
Employees.
(a) Schedule 3.22 contains a true, complete and
correct list of certain individuals who are employed by the
Company or who, as of the Closing, will be employed by the
Company (each, a "Key Employee"), including, with respect to
each such Key Employee, the annual salary or compensation
of such Key Employee and any bonuses or incentive awards or
other benefits paid or to which such Key Employee was or is
entitled in 1992 and 1993. None of the Key Employees has
served notice of termination of his/her employment with the
Company. To the knowledge of Seller, there is not in
existence any Contract of employment with any Employee (or
any Contract for services with any individual) which, if
terminated or purported to be terminated by three (3) months'
notice or less, would give rise to a claim for material damages
or compensation (in addition to any right to a claim for a
statutory redundancy payment or statutory compensation for
unfair dismissal).
(b) No material dispute has arisen within the
two (2) years immediately preceding the date of this
Agreement between the Company and a material number or
category of the Employees (or any trade union or other body
representing all or any of the Employees) and, to the
knowledge of Seller, there are no present circumstances which
are likely to give rise to any such dispute. No material
liability has been incurred by the Company for breach of any
Contract of service or for services, for redundancy payments,
protective awards or for compensation for wrongful dismissal
or for failure to comply with any order for the reinstatement
or re-engagement of any Employee for any other material
liability accruing from the termination of employment or
services.
SECTION 3.23. Banks, Brokerage Accounts
and Powers of Attorney. Schedule 3.23 contains a true,
complete and correct list of: (a) the name of each bank, trust
company, securities or other broker or other financial
institution with which the Company has an account, credit line
or safe deposit box or vault, or otherwise maintains business
relations; (b) the name of each Person authorized by the
Company to draw thereon or to have access to any safe
deposit box or vault; and (c) the names of all Persons
authorized by powers of attorney, proxies or other instruments
to act on behalf of the Company (other than those Persons
who are managing general agents and set forth on Schedule
3.11).
SECTION 3.24. Brokers and Finders, etc.
Neither Seller nor the Company, nor any of their respective
officers, directors or employees, nor any of their Affiliates, has
employed any broker, agent or finder, or incurred any liability
for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated by this
Agreement, other than fees to the Persons listed on Schedule
3.24, which fees are obligations solely of Seller and will be
duly paid by Seller.
SECTION 3.25. Securities. Seller is acquiring
the Buyer Shares and the Senior Preference Shares solely for
its own account and not with a view to any distribution of the
Buyer Shares or the Senior Preference Shares or any part
thereof, or interest therein, except in accordance with the
United States Securities Act of 1933, as amended (the
"Securities Act").
SECTION 3.26. Contribution. The cash
contribution of US $44,928,493.00 made on June 17, 1993 by
Seller to the Company, is properly characterized as profits
available for distribution (distributable reserves) in accordance
with section 263(3) of the Companies Act and in accordance
with applicable UK Accounting Standards.
SECTION 3.27. Unionamerica Reorganization.
Prior to the date of this Agreement, Seller has made available
to Buyer true, complete and correct copies of those certain
agreements between the Company and certain of its Affiliates
pursuant to which the Company acquired the assets set forth
in those agreements (the "Unionamerica Reorganization").
SECTION 3.28. Termination of Certain
Affiliate Contracts. As of the Closing, the Company shall
have no liabilities or obligations (whether actual or
contingent) under any of the Contracts set forth on Schedule
5.5.
SECTION 3.29. Full Disclosure. No
representation or warranty of Seller herein contains an untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements made not
misleading.
SECTION 3.30. No Representation as to
Insurance or Reinsurance Reserves. Notwithstanding anything
contained in any of the Transaction Documents, including,
without limitation, any of the representations and warranties
contained in this Article III, Seller makes no representation or
warranty with respect to the adequacy of the Company's
reserves for losses (including losses incurred but not reported)
or loss adjustment expenses.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND
PARENT
Buyer and Parent represent and warrant as
follows:
SECTION 4.1. Corporate Existence. Each of
Buyer and Parent is a private company limited by shares,
incorporated in England, and has full power and authority and
possesses all rights, licenses, authorizations and approvals,
governmental or otherwise, necessary to entitle it to use its
name, to own, lease or otherwise hold its properties and
assets, to carry on its business as currently conducted and to
perform its obligations under the Transaction Documents to
which it is a party. Neither Buyer nor Parent has conducted
any business other than in connection with the transactions
contemplated by the Transaction Documents.
SECTION 4.2. Authorization; Enforcement.
Each of Buyer and Parent has all necessary corporate power
and authority to execute and deliver the Transaction
Documents to which it is a party, and to perform its
obligations under the Transaction Documents to which it is a
party in accordance with the terms of such Transaction
Documents. Each of Buyer and Parent has taken all
necessary corporate action to duly and validly authorize its
execution and delivery of this Agreement and the
consummation of the transactions contemplated thereby. As
of the Closing, each of Buyer and Parent will have taken all
necessary corporate action to duly and validly authorize its
execution and delivery of the Transaction Documents (other
than this Agreement) to which it is a party and the
consummation of the transactions contemplated by such
Transaction Documents. This Agreement has been duly
executed and delivered by each of Buyer and Parent and
constitutes a valid and legally binding obligation of each of
Buyer and Parent, enforceable against each of them in
accordance with its terms. On or before the Closing Date,
each of the other Transaction Documents to which Buyer or
Parent is a party will be duly executed and delivered by Buyer
or Parent, as the case may be, and when executed and
delivered by Buyer and Parent, as the case may be, will
constitute a valid and legally binding obligation of Buyer or
Parent, as the case may be, enforceable against Buyer or
Parent, as the case may be, in accordance with its terms.
SECTION 4.3. Consents and Approvals. No
Consent is required to be obtained, made or given by or with
respect to Buyer or Parent in connection with the execution
and delivery by Buyer or Parent of any of the Transaction
Documents to which Buyer or Parent, as the case may be, is a
party, the performance by Buyer or Parent of its obligations
under any of such Transaction Documents or the
consummation of the transactions contemplated by the
Transaction Documents, other than as described in Sections
6.1(e) and 6.1(f).
SECTION 4.4. No Conflicts. Neither (i) the
execution or the delivery by Buyer or Parent of this
Agreement, or the performance by Buyer or Parent of this
Agreement, or the consummation of the transactions
contemplated by this Agreement, nor (ii) the execution or the
delivery by Buyer or Parent of the Transaction Documents
(other than this Agreement) to which Buyer or Parent is a
party, or the performance by Buyer or Parent of such
Transaction Documents, or the consummation of the
transactions contemplated by such Transaction Documents,
will at the time of such execution, delivery, performance or
consummation (as the case may be):
(a) conflict with or result in a breach of any
provision of the Memorandum and Articles of Association of
Buyer or Parent;
(b) result in any conflict with, breach or
violation of, or default (or event which, with the giving of
notice or lapse of time or both, would constitute a default)
under, require any consent or approval which has not been
obtained with respect to, give rise to any right of termination,
cancellation or acceleration of any obligations or loss of any
benefit under, or result in the imposition of any Liens on any
of the properties or assets of Buyer or Parent under: (1) any
Contract or permit, concession, franchise or license to which
Buyer or Parent is a party or by which it or any of its
properties or assets is bound or (2) any order, decree,
injunction, law, rule or regulation applicable to Buyer or
Parent or any of its properties or assets, which conflict,
breach, violation or default, or failure to obtain consent or
approval, or right of termination, cancellation or acceleration,
or loss of benefit or imposition of any Lien, would have, in
any case or in the aggregate, a material adverse effect on
Buyer's or Parent's business, operations, assets, liabilities or
financial condition or which would interfere in any material
way with the ability of Buyer or Parent to consummate the
transactions contemplated by such Transaction Documents.
SECTION 4.5. Capital Structure. As of the
Closing, the Buyer Shares will have been duly authorized and,
immediately prior to delivery of the relative share warrants to
bearer in respect thereof in the manner described herein, will
be validly issued and fully paid. Upon the exchange of the
Buyer Shares for the A Senior Preference Shares pursuant to
Section 1.2, the A Senior Preference Shares will have been
duly authorized, will have the benefit of the applicable rights
and covenants set forth in Exhibit B, and will rank senior in
priority above any and all other classes of authorized share
capital of Parent (other than the B Senior Preference Shares).
Upon the exchange of the Buyer Shares for the A Senior
Preference Shares pursuant to Section 1.2, the B Senior
Preference Shares of US $1 each of Parent (the "B Senior
Preference Shares" and, together with the A Senior Preference
Shares, the "Senior Preference Shares") will have been duly
authorized, and, upon issue, will have the benefit of the
applicable rights and covenants set forth in Exhibit B and will
rank senior in priority above any and all other classes of
authorized share capital of Parent (other than the A Senior
Preference Shares). Upon allotment and delivery of the
relative share certificate(s) in respect of the A Senior
Preference Shares in the manner described herein, the A
Senior Preference Shares will be validly issued and fully paid.
There are no standstill, voting or similar agreements or
Contracts nor rights of first offer or first refusal to which
Buyer, Parent or any of their respective Affiliates is a party
that currently or in the future will limit the ability of any
Person to acquire, vote, sell, hold or otherwise deal with the
Buyer Shares (other than Liens which may be required by
lenders to Buyer or Parent in connection with financing for
this transaction) or the Senior Preference Shares. Upon the
consummation of the transactions contemplated by this
Agreement, Seller will acquire from Parent beneficial
ownership of the A Senior Preference Shares, free and clear
of all Liens, together with all rights which now are, or at any
time hereafter may become, attached to them, including the
right to receive all dividends and other distributions declared,
made or paid after the Closing Date.
SECTION 4.6. Brokers and Finders, etc.
Neither Buyer nor Parent nor any of their respective directors,
officers or employees, nor any of their Affiliates, has
employed any broker, agent or finder or incurred any liability
for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated by this
Agreement.
SECTION 4.7. Available Funds. Subject only
to the satisfaction of the condition set forth in Section 6.1(h),
Buyer will have sufficient funds at the Closing to purchase the
Shares pursuant to this Agreement.
SECTION 4.8. Securities. Buyer is acquiring
the Shares solely for its own account and not with a view to
any distribution or other disposition of the Shares or any part
thereof, or interest therein, except in accordance with the
Securities Act.
SECTION 4.9. Full Disclosure. No
representation or warranty of Buyer or Parent contained in
this Agreement contains an untrue statement of a material
fact or omits to state a material fact necessary in order to
make the statements made not misleading.
ARTICLE V
COVENANTS
SECTION 5.1. Operations in the Ordinary
Course. Except as otherwise contemplated by this Agreement
or consented to in writing by Buyer, from the date of this
Agreement through the Closing Date, Seller will cause the
Company to conduct its business only in the usual, regular and
ordinary course consistent with past practices. Without
limiting the generality of the foregoing, Seller will cause the
Company to:
(a) use reasonable efforts to maintain insurance
coverages on the assets and properties of the Company on a
basis consistent with past practice;
(b) maintain its books, accounts and records on
a basis consistent with past practice;
(c) comply in all material respects with all
applicable judgments, orders, injunctions, laws, statutes,
regulations, ordinances and Permits of Governmental
Authorities and preserve in full force and effect all Permits
material to the Company's business and operations;
(d) maintain and keep its material properties
and equipment in good repair, working order and condition,
subject to reasonable and normal wear and tear;
(e) perform in all material respects its
obligations under all Scheduled Contracts and under all
insurance and reinsurance Contracts to which the Company is
a party (in each case, on a basis consistent with past practice);
and
(f) use its reasonable efforts to maintain and
preserve its business organization, retain the services of the
Key Employees, and maintain its relationships with its agents,
policyholders, suppliers and customers.
SECTION 5.2. Restrictions. Except as
otherwise contemplated by this Agreement or the Tax
Indemnification Agreement or consented to in writing by
Buyer, from the date of this Agreement through the Closing
Date, Seller will not permit the Company to:
(a) incur any indebtedness for borrowed money
or guarantee any such indebtedness or issue or sell any debt
securities of the Company or guarantee any debt securities of
other Persons other than in the ordinary course of business
consistent with past practice;
(b) grant or create any Lien on any of its assets
other than Liens in the ordinary course of business consistent
with past practice;
(c) make any material changes in its Investment
Policies or make any material change in its financial, tax or
accounting methods, principles or practices (including any
material change with respect to the establishment of reserves
for unearned premiums, losses (including incurred but not
reported losses) and loss adjustment expenses or any change
in depreciation or amortization policies or rates adopted by
it), except as may be required by law or applicable UK
Accounting Standards;
(d) grant to any Employee any increase in
salary or other regularly paid remuneration which would
constitute a material increase in the salary or other
remuneration of such Employee, or grant to any Employee
any increase in severance or termination pay; grant or approve
any general increase in salaries of all or a substantial portion
of the Employees; pay or award any bonus, incentive
compensation, service award or other like benefit for or to the
credit of any Employee; enter into any employment Contract
with any Employee except as may be required under any
employment Contract set forth on Schedule 3.11; or adopt or
amend in any material respect any Employee Benefit Plan;
(e) authorize, allot, issue, deliver or sell any
shares in the capital of the Company or obligations or
securities convertible into or exchangeable for, or warrants,
options or other rights in respect of, any such shares;
(f) amend its Memorandum or Articles of
Association;
(g) declare, pay or make any dividends or other
distributions (whether in cash, securities or other property or
any combination thereof) or reduce, repurchase, redeem or
otherwise acquire any of its share capital;
(h) acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any
other manner, any business or any Person or otherwise
acquire any assets or properties that are material, individually
or in the aggregate, to the Company;
(i) sell, lease or otherwise dispose of any of its
assets or properties that are material, individually or in the
aggregate, to the Company (other than transactions involving
securities in its investment portfolio in the ordinary course of
business consistent with past practice, except as set forth in
paragraph (p) of this Section 5.2);
(j) make any capital expenditure or execute any
lease or incur any commitment or liability therefor not
contained in a written budget prepared by the management of
the Company on or before the date of this Agreement
involving annual payments in excess of 15,000 pounds individually or
50,000 pounds in the aggregate (other than expenditures, leases,
commitments or liabilities arising from the purchase or lease
of automobiles owned by the Company for use in its business,
if such automobiles are purchased or leased to replace an
existing Company automobile and the purchase price or lease
price for such new automobile is not materially greater than
that for the automobile being so replaced);
(k) enter into any Contract that would meet any
criterion for inclusion on Schedule 3.11, or terminate, amend
or modify any Scheduled Contract involving future liabilities
in excess of 100,000 pounds in any case;
(l) commute any reinsurance Contract with any
of Seller's Affiliates;
(m) cancel any indebtedness involving liabilities
in excess of 10,000 pounds in any case;
(n) waive or compromise any rights having an
economic value to the Company in excess of 20,000 pounds in any
case (other than commutations of insurance or reinsurance
Contracts (other than those referred to in Section 5.2(l)) and
settlements of insurance and reinsurance claims in the
ordinary course of business consistent with past practice);
(o) settle pending or threatened Litigation
(other than insurance or reinsurance Litigation in the ordinary
course of business consistent with past practice) in an amount
exceeding 25,000 pounds in the aggregate;
(p) take any capital gains (or realize any
investment profit) in excess of US $500,000 in the aggregate
or decrease the level of its technical reserves (other than the
payment of claims under Insurance Arrangements in the
ordinary course of business consistent with past practice);
(q) purchase or otherwise invest in any interest
in (1) real property (including any extension of credit secured
by a mortgage or deed of trust), (2) common or ordinary
shares or (3) bonds, notes, debentures or other evidence of
indebtedness rated lower than "Aa" by Moody's Investors
Service, Inc. or "AA" by Standard & Poor's Corporation at the
time of purchase;
(r) make any payments to its Affiliates (other
than pursuant to the terms of the Scheduled Contracts
described in Section 3.11(a)(8) and Insurance Arrangements);
(s) take any action, or omit to take any action,
that would result in, (1) any of the representations and
warranties of Seller that are qualified as to materiality
becoming untrue or any of such representations or warranties
that are not so qualified becoming untrue in any material
respect or (2) any of the conditions to the Closing not being
satisfied; or
(t) authorize any of, or commit or agree to take
any of, the foregoing actions.
SECTION 5.3. Related Matters.
(a) Seller shall promptly report to Buyer the
termination of employment of, or a written threat to terminate
employment made by, any of the Key Employees.
(b) Seller shall promptly notify Buyer in writing
of any event, condition, change or effect having, or which,
insofar as reasonably can be foreseen, would have, a Material
Adverse Effect.
(c) Seller shall promptly notify Buyer in writing
of any matter or change that affects or, insofar as reasonably
can be foreseen, would affect the accuracy or completeness of
any representation or warranty made by Seller in this
Agreement. If such representation or warranty is of a nature
that can be made accurate, Seller shall use its reasonable
efforts to promptly effect appropriate curative action and shall
provide Buyer with evidence thereof reasonably satisfactory to
Buyer.
(d) Seller shall promptly notify Buyer in
writing if it fails to perform or observe any covenant or
agreement to be performed or observed by it under this
Agreement and shall use its reasonable efforts to promptly
effect appropriate curative action and shall provide Buyer with
evidence thereof reasonably satisfactory to Buyer.
SECTION 5.4. Access to Information. Seller
shall cause the Company to afford to Buyer, and to Buyer's
accountants, counsel, financial advisers and other
representatives, at reasonable times (during normal business
hours) during the twenty (20) Business Days following the
execution of this Agreement (subject to extension by written
agreement of Buyer and Seller) (the "Initial Due Diligence
Period") and thereafter until the Closing Date, access to all of
its books, records, Contracts, facilities and personnel, including
management and Employees, so that Buyer may investigate
the Company (including its financial statements, accounting
methods, assets, liabilities, insurance and reinsurance
Contracts and other arrangements, client lists, administrative
procedures, operations and business plans and prospects); and
Seller shall cause the Company to furnish promptly to Buyer
from the date hereof until the Closing: (a) a copy of each
material document filed by it or provided during such period
pursuant to the requirements of any United Kingdom, State or
other applicable insurance law or regulation; (b) updated
financial statements comparable to those described in Section
3.8(a) promptly after such financial statements have been
prepared by the Company in accordance with past practice, in
the case of each quarterly financial statement, certified by the
Finance Director of the Company and, in the case of each
annual financial statement, signed by the directors and audited
by KPMG Peat Marwick; (c) after the end of each month, its
management financial reports (together with all accompanying
documents), underwriting revenue accounts and profits and
loss accounts, in each case prepared with respect to such
month in accordance with past practice; (d) each written
report or examination of financial condition or market
conduct (whether in draft or final form) of the Company
issued by any Governmental Authority that has been received
by the Company; (e) after the end of each month, status
reports of the Scheduled Investments and any other
Investments in the Company's investment portfolio after the
date hereof, showing the composition and valuation of the
investment portfolio as of the end of such month (provided
that during the month immediately preceding the anticipated
Closing Date, Seller shall cause Buyer to be furnished with
such investment portfolio status reports at the end of each
week); (f) all auditors' working papers (to the extent
reasonably obtainable) and internal work papers utilized or
referred to in the preparation of the Company Financials;
(g) all material correspondence with any Governmental
Authority or Tax Authority; (h) all correspondence, internal
memoranda and filings relating to any material Litigation or
claims against the Company (other than in connection with
Insurance Arrangements) solely to the extent that furnishing
such documents would not, in the reasonable judgment of
counsel to Seller, breach any attorney-client privilege; and
(i) all other information and documents concerning the
Company's business, properties and personnel as Buyer may
reasonably request. All nonpublic information received
pursuant to this Section 5.4 shall be deemed by the parties
hereto to be "Confidential Information" for purposes of the
Confidentiality Agreement dated October 12, 1992 between
Lazard Brothers & Co., Limited and International Insurance
Advisors, Inc. (the "Confidentiality Agreement") and shall be
subject to the Confidentiality Agreement.
SECTION 5.5. Termination of Certain Affiliate
Agreements. Seller shall cause each of the Contracts between
the Company and its Affiliates listed on Schedule 5.5 to be
terminated prior to the Closing with settlement values not to
exceed amounts actually accrued under such Contracts and in
no event to include compensation for early termination
(except in the case of the inwards reinsurance agreement with
The Continental Insurance Company which will be cancelled
in exchange for a payment by the Company not exceeding the
Company's net reserves recorded in its books as at the date of
cancellation in respect of its net retention under that
agreement and the outwards reinsurance contract with Bayside
Reinsurance Company, which will be cancelled without
compensation).
SECTION 5.6. No Solicitation. Seller shall not,
nor shall it permit any of its Affiliates to, nor shall it authorize
or permit any director, officer or employee (or any investment
banker, attorney or other advisor or representative) of Seller
or any of its Affiliates to, directly or indirectly, (a) solicit,
initiate or encourage the submission of any Investment
Proposal (as defined below), (b) enter into any Contract with
respect to any Investment Proposal, (c) participate in any
discussions or negotiations regarding, or furnish to any Person
any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any
Investment Proposal. Without limiting the generality of the
foregoing, it is understood that any violation of the restrictions
set forth in the preceding sentence by any director, officer or
employee (or any investment banker, attorney or other advisor
or representative) of Seller or any of its Affiliates, with the
knowledge of Seller but whether or not such Person is
purporting to act on behalf of Seller or otherwise, shall be
deemed to be a breach of this covenant by Seller. For the
purposes of this Agreement, "Investment Proposal" means any
proposal or offer (other than an offer by Buyer or any of its
Affiliates) for a merger, consolidation or other business
combination involving the Company or any proposal or offer
(other than a proposal or offer by Buyer or any of its
Affiliates) to acquire in any manner, directly or indirectly, an
equity interest in any voting securities of or a substantial
portion of the assets of the Company.
SECTION 5.7. Financing. Buyer shall use its
best efforts to obtain within ten (10) Business Days following
the expiration of the Initial Due Diligence Period (the
"Commitment Date"), one or more commitment letters
between Buyer and lenders which, subject to the satisfaction
or waiver of certain conditions, commit such lenders to make
available to Buyer an aggregate of not less than
US $80,000,000.
SECTION 5.8. Filings and Authorizations.
Each of Buyer, Parent and Seller shall, as promptly as
practicable, file or supply, or cause to be filed or supplied, all
applications, notifications and information required to be filed
or supplied by it pursuant to applicable law in connection with
the transactions contemplated by this Agreement, including
such documentation and information as may be requested by
the Secretary of State (as referred to in the Insurance
Companies Act) in order to obtain the approval described in
Section 6.1(e). Each of Buyer, Parent and Seller, as promptly
as practicable, shall (a) make, or cause to be made, all such
filings and submissions under laws, rules and regulations
applicable to it, or to its Affiliates, and give such reasonable
undertakings, as may be required for it to consummate the
transactions contemplated by this Agreement, (b) use its
reasonable efforts to obtain or cause to be obtained, all
authorizations, approvals, consents and waivers from all
Persons and Governmental Authorities necessary to be
obtained by it, or its Affiliates, in order for it so to
consummate such transactions and (c) use its reasonable
efforts to take, or cause to be taken, all other actions
necessary, proper or advisable in order for it to fulfill its
obligations hereunder. Buyer, Parent and Seller will
coordinate and cooperate with one another in exchanging such
information and supplying such reasonable assistance as may
be reasonably requested by each in connection with the
foregoing.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. Conditions to Buyer's and
Parent's Obligations. The obligations of Buyer and Parent to
consummate the Closing are subject to the delivery of all
documents required to be delivered by Seller pursuant to
Section 2.2 and to the satisfaction in full, prior to or at the
Closing, of each of the following conditions precedent (any
one or more of which may be waived by Buyer and Parent):
(a) Representations and Warranties. All
representations and warranties of Seller contained in Article
III qualified as to materiality shall be true, complete and
correct, and those not so qualified shall be true, complete and
correct in all material respects, at and as of the Closing Date
as if such representations and warranties were made at and as
of the Closing Date, except as affected by actions taken after
the date of this Agreement in compliance with the terms
hereof.
(b) Compliance with Agreements and
Conditions. Seller shall have performed and complied in all
material respects with all covenants, agreements, obligations
and conditions required by this Agreement to be performed or
complied with by it at or before the Closing Date.
(c) Seller's Certificates. Seller shall have
delivered to Buyer and Parent: (1) a certificate, dated the
Closing Date, signed on behalf of Seller by two (2) of its
officers who shall be executive vice presidents and/or senior
vice presidents, to the effect that the conditions set forth in
Sections 6.1(a) and 6.1(b) have been satisfied; and (2) a
certificate, dated the Closing Date, signed on behalf of Seller
by its chief financial officer, to the effect that the contribution
of US $44,928,493 contributed to the Company by Seller as
described in Section 3.26 is properly characterized as profits
available for distribution (distributable reserves) in accordance
with section 263(3) of the Companies Act and in accordance
with applicable UK Accounting Standards as of the Closing
Date.
(d) Litigation. The consummation of the
Closing shall not have been prohibited or restrained by any
order, injunction, decree or judgment of any Governmental
Authority.
(e) Insurance Companies Act Approval. Either
(1) Buyer shall have received from the Secretary of State,
before the expiration of the three (3) month period from the
date of service on him of the notice of intention of each of
Buyer, Parent and certain of their Affiliates to become a
controller of the Company and comply with section 61 of the
Insurance Companies Act, a written notice stating that the
Secretary of State has no objection to each such Person
becoming a controller of the Company, or (2) such three (3)
month period shall have elapsed without the Secretary of
State having served a written notice of objection in respect of
any such Person becoming a controller.
(f) Monopolies and Mergers Approval. Buyer
shall have received, in form and substance reasonably
satisfactory to it, confirmation from the Secretary of State for
Trade and Industry that the proposed acquisition and any
matters arising therefrom will not be referred to the
Monopolies and Mergers Commission.
(g) Opinions. Buyer shall have received the
opinions dated the Closing Date, addressed to Buyer, of (1)
Debevoise & Plimpton, United States counsel to Seller,
substantially in the form of Exhibit L; and (2) Lovell White
Durrant, English solicitors to Seller and the Company,
substantially in the form of Exhibit M.
(h) Financing. Buyer shall have obtained
proceeds from financing sources in an aggregate amount of
not less than US $80,000,000 on substantially the terms and
conditions set forth in the letters described in Section 5.7 to
enable it to consummate the transactions contemplated
hereby.
SECTION 6.2. Conditions to Seller's
Obligations. Seller's obligations to consummate the Closing
are subject to the delivery of all documents required to be
delivered by Buyer or Parent pursuant to Section 2.2 and to
the satisfaction in full, prior to or at the Closing, of each of
the following conditions precedent (any one or more of which
may be waived by Seller):
(a) Representations and Warranties. All
representations and warranties of Buyer and Parent contained
in Article IV qualified as to materiality shall be true, complete
and correct, and those not so qualified shall be true, complete
and correct in all material respects, at and as of the Closing
Date as if such representations and warranties were made at
and as of the Closing Date, except as affected by actions taken
after the date of this Agreement in compliance with the terms
hereof.
(b) Compliance with Agreements and
Conditions. Buyer and Parent shall have performed and
complied in all material respects with all covenants,
agreements, obligations and conditions required by this
Agreement to be performed or complied with by them at or
before the Closing Date.
(c) Buyer's Certificates. Buyer and Parent shall
have delivered to Seller certificates, dated the Closing Date,
signed on behalf of Buyer by two (2) of its directors, and on
behalf of Parent by two (2) of its directors, to the effect that
the conditions set forth in Sections 6.2(a) and 6.2(b),
respectively, have been satisfied.
(d) Litigation. The consummation of the
Closing shall not have been prohibited or restrained by any
order, injunction, decree or judgment of any Governmental
Authority.
(e) Consents. The Consents described in
Sections 6.1(e) and 6.1(f) shall have been duly obtained, made
or given and shall be in full force and effect at the Closing.
(f) Opinions. Seller shall have received the
opinion dated the Closing Date, addressed to Seller, of (1)
Freshfields, English solicitors to Buyer and Parent,
substantially in the form of Exhibit N, and (2) LeBoeuf,
Lamb, Leiby & MacRae, United States counsel to Buyer and
Parent, substantially in the form of Exhibit O.
ARTICLE VII
FURTHER AGREEMENTS
SECTION 7.1. Pension Agreement.
(a) Definitions. In this Section 7.1, unless the
context otherwise requires, expressions shall have the
following meanings:
(1) "Transfer Amount" means the
transfer amount calculated in accordance with the
Actuary's Letter.
(2) "Actuary's Letter" means the letter
from Seller's Actuary to Buyer's Actuary, a copy of
which is attached in the agreed form as Schedule 7.1.
(3) "Interest" means, in relation to any
amount, the increase in the value of a unit in the
Scottish Widows Pension Management (SWF) Limited
Managed Fund between one day before the Payment
Date and one day before the date of actual payment.
(4) "Payment Date" means such date as
shall be agreed in writing by Seller and Buyer falling
on or after the Pension Transfer Date or, in default of
agreement, seven (7) days after the later of the
following dates:
(A) The date the Transfer
Amount is agreed upon by Buyer's Actuary in
accordance with Section 7.1(d) or the date of
final determination of the Transfer Amount in
accordance with Section 7.1(g) (as the case may
be), or
(B) The date the Inland Revenue
approves the transfer from the Unionamerica
Scheme to Buyer's Scheme (if such approval is
necessary).
(5) "Buyer's Actuary" means Mr. Ian
Boonin of Coopers & Lybrand or such other Actuary as
Buyer may from time to time appoint for the purposes
of this Section 7.1.
(6) "Buyer's Scheme" means a scheme or
schemes to be nominated in accordance with Section
7.1(c), and where the context requires, means the
trustees of Buyer's Scheme.
(7) "Pension Transfer Date" means
Closing or where Buyer so requests a period of
continued participation by the Company as an
Employer under the Unionamerica Scheme (such
period being an "Interim Period") a date not later than
December 31, 1993 or such prior date falling between
Closing and December 31, 1993 as Buyer shall on
written notice to Seller select. Any participation during
an Interim Period shall be upon such terms and
conditions as Seller and Buyer shall agree but subject
always to the terms and conditions for participation by
an Employer set out in the Unionamerica Scheme at
the date of this Agreement.
(8) "Relevant Employees" means those
Key Employees who are active members of the
Unionamerica Scheme at Closing.
(9) "Transferring Employees" means
those of the Relevant Employees who continue to be
employed by the Company after Closing and who
become members of Buyer's Scheme with effect from
the Pension Transfer Date pursuant to the offer of
membership referred to in Section 7.1(c) and who
consent to a payment or transfer from the
Unionamerica Scheme to Buyer's Scheme in respect of
the benefits accrued up to the Pension Transfer Date
under the Unionamerica Scheme for and in respect of
them.
(10) "Unionamerica Scheme" means the
Unionamerica Pension Scheme (formerly known as the
Continental Reinsurance London Pension Scheme and
prior to that and from its inception known as the
Unionamerica Management Co. Ltd. Retirement and
Death Benefits Scheme) established by a declaration of
trust dated December 13, 1972 and now governed by a
Trust Deed and Rules dated August 22, 1991.
(11) "Seller's Actuary" means Mr.
Christopher Carr of The Alexander Consulting Group
or such other Actuary as Seller may from time to time
appoint for the purposes of this Section 7.1.
(b) Period between Exchange of Contracts and
Closing/Payment Date.
It is hereby agreed that:
(1) Seller shall procure that the
Unionamerica Scheme shall be maintained in full force
and effect until the Payment Date and shall use its best
efforts to procure that the Unionamerica Scheme
retains approval as an exempt approved scheme under
Chapter 1 of Part XIV of the Taxes Act.
(2) Seller shall procure that, with the
exception of such amendments as may be necessary to
enable the Unionamerica Scheme to comply with any
statutory provision or regulation or any direction from
or requirement of the Inland Revenue, no amendment
to the Unionamerica Scheme will be made prior to the
Payment Date if such amendment would affect the
Transfer Amount or the amount to be received by
Buyer's Scheme pursuant to this Section 7.1.
(3) Seller shall use its best efforts to
procure that, except with Buyer's prior written consent,
no act or omission shall occur before the Pension
Transfer Date which causes or would cause:
(A) The transfer of all or any
part of the Transfer Amount to Buyer's
Scheme to be unreasonably delayed or
prevented; or
(B) An enhancement or change
before the Payment Date of any benefits
payable or contingently payable under the
Unionamerica Scheme to any Relevant
Employee.
(4) Until the Pension Transfer Date all
benefits payable under the Unionamerica Scheme on
the death of a Relevant Employee before normal
pension age while in employment will be fully insured
under a policy with an insurance company of good
repute authorized to issue such insurance.
(c) Buyer's Scheme. Subject to Seller
complying with Section 7.1(b) above in all material respects,
Buyer shall use all reasonable efforts to procure before
Closing and shall in any event procure that before the
Payment Date and with effect from a date no later than the
Pension Transfer Date, Buyer will have nominated or
established (or become a party to) a retirement benefits
scheme which is approved or capable of approval under
Chapter I of Part XIV of the Taxes Act and to which the
trustees of the Unionamerica Scheme can make a transfer of
cash and/or assets without prejudicing the approval of the
Unionamerica Scheme as an exempt approved scheme. Buyer
shall procure that each of the Relevant Employees who
remain employed by the Company and who have not attained
the normal pension age under either Buyer's Scheme or the
Unionamerica Scheme at the Pension Transfer Date will be
offered membership of Buyer's Scheme with effect from the
Pension Transfer Date.
Subject to receipt by Buyer's Scheme of the
Transfer Amount together with Interest, if any, Buyer shall
procure that Buyer's Scheme shall credit the Transferring
Employees in respect of their pensionable service in the
Unionamerica Scheme before the Pension Transfer Date with
benefits on the terms of Buyer's Scheme which are, agreed by
Seller's Actuary and Buyer's Actuary, as being no less
favorable overall in value to those benefits which apply to the
Transferring Employees at the date of this Agreement.
(d) Determination of Transfer Amount.
(1) As soon as reasonably practicable
after the date of this Agreement, Seller shall instruct
Seller's Actuary to prepare prior to Closing such
calculations as may reasonably be required by Buyer's
Actuary for the purpose of verifying the Transfer
Amount and to make available such calculations
promptly to Buyer's Actuary.
(2) As soon as reasonably practicable
after Closing, Seller shall instruct Seller's Actuary to
calculate the Transfer Amount and to submit his
findings to Buyer's Actuary for verification and
agreement by him. If Buyer's Actuary agrees that such
computation is in accordance with this Section 7.1, he
shall notify in writing, within thirty (30) days after
receipt of Seller's Actuary's findings, Seller's Actuary
and Buyer of such agreement. If Buyer's Actuary does
not agree as aforesaid, Seller's Actuary and Buyer's
Actuary will then seek within thirty (30) days to
negotiate a satisfactory agreement. If Seller's Actuary
and Buyer's Actuary remain unable to agree upon the
Transfer Amount after such period, the matter shall be
referred to an Independent Actuary pursuant to Section
7.1(g).
(3) Seller shall use its best efforts to
procure that all such information as Buyer's Actuary
may reasonably require for the purpose of verifying and
agreeing the Transfer Amount shall be made promptly
available to Buyer's Actuary and that all such
information shall be true and complete.
(4) Seller and Buyer shall use their best
efforts to expedite the calculation and agreement of the
Transfer Amount.
(e) Payment of Transfer Amount. Seller hereby
(subject to Buyer complying in all material respects with its
obligations under Section 7.1(c) above) consents to the
trustees of the Unionamerica Scheme making a payment in
cash (or such other assets of mid-market value as Buyer may
agree or a combination of both) equal to the Transfer
Amount on the Payment Date together with Interest, if any,
from the Payment Date to the date of actual payment. Seller
shall procure that with effect from the Pension Transfer Date
the Company is released and discharged from all liabilities
under or in connection with the Unionamerica Scheme or to
the trustees of the Unionamerica Scheme.
To the extent that the amount received on or
before the Payment Date by Buyer's Scheme from the
Unionamerica Scheme falls short of that which would have
been paid (or if no amount is paid) but is payable had the
Transfer Amount in respect of Transferring Employees been
calculated in accordance with the Actuary's Letter and this
Section 7.1 (the amount of such difference being referred to in
this paragraph as the "shortfall"), Seller then shall pay
forthwith to Buyer within seven (7) days of the Payment Date
an amount equal to the shortfall together with Interest. Buyer
shall cause an amount equal to the shortfall to be paid to the
trustees of Buyer's Scheme as soon as reasonably practicable
and in any event no later than one month after receipt of the
shortfall by Buyer.
(f) Additional Voluntary Contributions. Any
money purchase benefits (as defined in Section 66(1) of the
Social Security Pension Act of 1975) attributable to additional
voluntary contributions made (or deemed to have been made)
by the Transferring Employees to the Unionamerica Scheme
together with the accrued investment return thereon shall be
disregarded for the purpose of determining the Transfer
Amount.
Seller shall use its best efforts to procure that on
the Payment Date, where a Transferring Employee so requests
and subject to applicable legislative and regulatory
requirements, the trustees of the Unionamerica Scheme shall
pay or transfer to the trustees of Buyer's Scheme, in addition
to the Transfer Amount together with Interest, if any, all sums
or policies which Seller's Actuary determines and Buyer's
Actuary agrees to relate to the additional voluntary
contributions paid by the Transferring Employees to the
Unionamerica Scheme.
(g) Disputes. Any dispute between Seller and
Buyer or Seller's Actuary and Buyer's Actuary concerning the
calculation of the Transfer Amount in accordance with the
Actuary's Letter or any other matter of an actuarial nature, in
the absence of agreement between them, shall be referred to
an independent actuary agreed by Seller and Buyer or, failing
such agreement within fourteen (14) days of one party calling
upon the other in writing so to agree, appointed by the
President for the time being of the Institute of Actuaries of
England and Wales. Any such independent actuary shall
reach his decision on the basis of the provisions of this Section
7.1 and the Actuary's Letter and shall be final and binding
upon Seller and Buyer. The charges and expenses of the
independent actuary in respect of any such reference shall be
borne equally by Seller and Buyer.
SECTION 7.2. Non-Competition. From the
date of this Agreement to the Closing Date, and for a period
of two (2) years after the Closing Date, Seller covenants that
except in connection with the transactions contemplated by
this Agreement, it shall not, and it shall cause its Affiliates not
to, individually or jointly with others, directly or indirectly,
whether for its own account or for that of any other Person,
own or hold any ownership or other participating interest in,
or manage, operate, control or otherwise participate as such
in, or act as a partner, principal or proprietor of any Person
engaged primarily in the traditional assumed treaty and
assumed facultative reinsurance business (exclusive of co-
insurance and business reinsured under cedents' marine
accounts) originated in the London Market and serviced from
within the United Kingdom (the "Unionamerica Business");
provided, however, that it shall not be a violation of this
Section 7.2 for Seller and its Affiliates to (a) own or hold a
passive investment as part of its investment portfolio in any
Person which engages in the Unionamerica Business, so long
as any such investment that is an equity investment does not
exceed five percent (5%) of the aggregate outstanding capital
stock (or other equity ownership interest) of such Person,
(b) acquire a Person no more than five percent (5%) of the
consolidated revenues of which for each of the three (3) fiscal
years of such Person ended prior to the acquisition of such
Person by Seller or any of its Affiliates were derived from the
Unionamerica Business, or (c) underwrite insurance and/or
reinsurance and/or provide insurance and/or reinsurance
related services to existing and successor insureds, insurers,
reinsurers, retrocessionaires and other clients of Seller and its
Affiliates (other than the Company and CRC(UK) to the
extent of the Unionamerica Business) in continuance of
arrangements and contracts existing with Seller and its
Affiliates (other than the Company and CRC(UK) to the
extent of the Unionamerica Business) on the date of this
Agreement (including all renewals or extensions thereof).
SECTION 7.3. Public Announcements. Buyer,
Parent and Seller will consult with each other before issuing
any press release or otherwise making any public statements
regarding the transactions contemplated by the Transaction
Documents, and will not issue any such release or make any
such statement, prior to such consultation or, after such
consultation, if any party is not reasonably satisfied with the
substance of such release or statement. Notwithstanding the
foregoing, any party hereto may make any disclosure required
to be made by it under applicable law (including United
States Federal securities law), stock exchange regulations or
order of a court of competent jurisdiction if it determines in
good faith, upon advice of counsel, that it is necessary to do
so and gives prior notice to the other parties hereto, using its
best efforts (given any time constraints) to contact the other
parties hereto and discuss such disclosure with such other
party(s).
SECTION 7.4. Expenses.
(a) Whether or not the transactions
contemplated by this Agreement are consummated or this
Agreement is terminated pursuant to Section 9.1, except as
provided in Section 7.4(b), all fees and expenses incurred in
connection with the Transaction Documents and the
transactions contemplated by this Agreement shall be paid by
the party incurring such fees or expenses.
(b) If this Agreement is terminated by Buyer
pursuant to (1) Section 9.1(c), as a result of a breach that has
or can reasonably be expected to have a financial consequence
to the Company of US $3,000,000 or more or materially
impairs the ability of any party to consummate the
transactions contemplated by this Agreement, or (2) Section
9.1(d), as a result of Buyer's rejection (pursuant to Section
7.10) of Seller's proposed amendment of a Schedule to this
Agreement, which proposed amendment was required to
reflect changes resulting from an act or omission of Seller or
any of its Affiliates, then, in each such case, Seller shall pay to
Buyer, in next day funds, an amount equal to 66-2/3% of the
reasonable out-of-pocket fees and expenses incurred or paid
by or on behalf of Buyer and its Affiliates in connection with
the Transaction Documents (including Buyer's due diligence
investigation, negotiations and the letter of intent preceding
this Agreement) or the consummation of any transactions
contemplated by the Transaction Documents, including all
reasonable fees and expenses of counsel, investment bankers,
accountants, actuaries, lenders, experts and consultants to
Buyer and its Affiliates; provided, however, that Seller's
aggregate liability for such fees and expenses shall not exceed
US $1,000,000; and, provided, further, that Buyer shall
provide Seller with reasonable documentation of the fees and
expenses for which Buyer seeks payment hereunder.
SECTION 7.5. D & O Insurance. On and after
the Closing Date, Seller shall provide (a) insurance coverage
for M.A.J. Hayden covering the matters described in Section
8.2(a)(5) regardless of when claims arose or are made, without
any coverage limitations, and (b) insurance coverage for all
present and former directors and officers of the Company
covering claims made after the Closing Date in respect of acts
or omissions occurring prior to the Closing Date, subject to
coverage limitations similar to those set forth in the directors
and officers insurance coverage that the Company has
obtained for its directors and officers as of the date the claim
is made but in any event with a coverage limit of 5,000,000 pounds in
the aggregate per annum, provided, however, that such
coverage shall not extend to any such director or officer who
does not cooperate in a reasonable manner with Seller in the
defense of any such claim. Parent and Buyer shall (and shall
cause the Company to) use reasonable commercial efforts to
obtain the cooperation of such directors and officers in the
defense of any claims, actions and proceedings covered by
such insurance.
SECTION 7.6. Seller's Covenants Regarding
Senior Preference Shares. In connection with any sale,
transfer or other disposition of all or any part of the Senior
Preference Shares under an exemption from registration under
the Securities Act, if requested by Parent, Seller will deliver to
Parent an opinion of counsel experienced in Securities Act
matters (which may be the General Counsel of Seller),
reasonably satisfactory in form and substance to Parent, that
such exemption is available. Seller hereby agrees and
acknowledges that upon original issuance thereof, and until
such time as the same is no longer required under the
applicable requirements of the Securities Act, the Senior
Preference Shares (and all securities issued in exchange
therefor or substitution thereof) shall bear, until such
restrictions are no longer applicable, the following legend:
"THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT"). THEY MAY
NOT BE SOLD OR TRANSFERRED
EXCEPT IN COMPLIANCE WITH THE
REGISTRATION PROVISIONS OF THE 1933
ACT AND ANY APPLICABLE STATE BLUE
SKY LAWS OR SECURITIES LAWS OR
PURSUANT TO AN AVAILABLE
EXEMPTION FROM SUCH PROVISIONS."
SECTION 7.7. Use of Certain Names.
Immediately following the Closing, Seller shall, and shall
cause all of its Affiliates to, cease conducting business under
the name "Unionamerica" or any variant thereof, whether
alone or in combination, and shall promptly cause any
Affiliate whose corporate name contains such words to change
its name to a name that does not contain such words (it being
understood that the licenses referred to in Schedule 3.20(a)(1)
with respect to the Unionamerica service mark will be
terminated at or immediately prior to the Closing). At or
immediately prior to the Closing, Seller shall assign to the
Company all of its right, title and interest in and to the service
marks set forth on Schedule 3.20, free from any material
Liens, pursuant to the Assignment of Trademarks. Seller shall
cause a duly executed assignment to the Company to be
recorded at each relevant national trademark registry (or
similar Governmental Authority), the reasonable costs
incurred in such recordings to be borne by Buyer. Except as
may be necessary in connection with the performance of their
obligations under the Run-Off Agreement, Buyer, Parent and
their Affiliates shall be prohibited from using the name
"Continental" or any variant thereof, whether alone or in
combination.
SECTION 7.8. Further Assurances. (a) On and
after the Closing Date, Buyer, Parent and Seller will take all
appropriate actions and execute all documents, instruments or
conveyances of any kind which may be reasonably necessary or
advisable to carry out any of the provisions hereof, including
those in order to put Buyer in possession and operating
control of the business of the Company.
(b) The parties shall cause the accounting
treatment of the contribution in the amount of US $44,928,493
(referred to in Section 3.26) in the accounts of the Company
(including the accounts of the Company to be prepared and
audited in respect of the year ending December 31, 1993 for
the purpose of the Companies Act) to be as set forth in
Schedule 7.8(b).
SECTION 7.9. Books and Records. Buyer and
Seller agree that with respect to any books, records and files
relating to the business, properties, assets or operations of the
Company, prior to the Closing Date in the possession of Buyer
and its Affiliates, on the one hand, or Seller and its Affiliates,
on the other hand, each party (at its expense) shall have the
right, to the extent reasonably requested by such party, to
inspect and to make copies of the same at any time during
normal business hours for any proper purpose. Seller further
agrees that, to the extent any such books, records and files
have not otherwise been delivered to the Company or Buyer,
Seller will not, and will not permit any of its Affiliates to,
destroy or dispose of any such books, records or files without
first offering to provide such books, records or files to Buyer
at no expense to Seller or any of its Affiliates. Buyer further
agrees that it will not, and will not permit any of its Affiliates
to, destroy or dispose of any such books, records or files
without first offering to provide such books, records or files to
Seller at no expense to Buyer or any of its Affiliates.
SECTION 7.10. Amendments of Schedules.
(a) Seller shall be permitted to amend the
Schedules to this Agreement only to the extent necessary to
reflect changes resulting from events occurring after the date
of this Agreement (each, an "Intervening Event").
Notwithstanding anything contained in this Section 7.10, Seller
shall not be permitted to amend any of the Schedules for any
other reason, including to correct or complete Schedules that
did not provide accurate disclosure of facts and circumstances
existing as of the date of this Agreement.
(b) If Seller proposes to amend a Schedule
prior to the Closing Date, Seller shall provide Buyer a copy of
the proposed amendment of such Schedule, together with a
certificate, duly executed by an executive officer of Seller,
setting forth a description of the Intervening Event (including
the date on which such Intervening Event occurred) requiring
such proposed amendment. Buyer shall in good faith review
such proposed amendment and certificate and shall promptly
notify Seller in writing whether it accepts or rejects such
proposed amendment; provided, however, that Buyer may not
reject any such proposed amendment unless Buyer determines,
in its good faith reasonable judgment, that without such
proposed amendment, the applicable representation and
warranty would not be true, complete and correct (if such
representation and warranty is qualified as to materiality) or
would not be true, complete and correct in all material
respects (if such representation and warranty is not qualified
as to materiality). If Buyer accepts such proposed
amendment, then the applicable Schedule and the related
representation and warranty shall be amended to reflect such
proposed amendment, effective as of the date of Buyer's
acceptance. If Buyer rejects such proposed amendment, then
Buyer may, by written notice to Seller, terminate this
Agreement pursuant to Section 9.1(d). Any notice of rejection
provided by Buyer hereunder must be accompanied by a
certificate, duly executed by a director of Buyer, setting forth
the basis for such rejection.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1. Survival of Representations, etc.
All representations and warranties contained in Articles III
and IV or made pursuant thereto shall not be affected by any
right of investigation by the parties or any knowledge of facts
determined in accordance therewith, and shall survive the
Closing until the date that is the first anniversary of the
Closing Date except that (a) the representations and
warranties in Sections 3.8, 3.9, 3.10, 3.13, 3.15, 3.19, 3.21, and
3.27 shall survive the Closing until May 31, 1995 and (b) the
representations and warranties in Section 3.14 shall survive
the Closing until the expiration of the applicable statutes of
limitation and (c) the representations and warranties in
Sections 3.5, 3.26 and 4.5 shall survive the Closing and
continue indefinitely. No action for indemnification under this
Article VIII may be brought with respect to such
representations and warranties after the expiration dates
indicated in the preceding sentence unless, prior to the date
such representations and warranties expire, the party seeking
indemnification has notified in reasonable detail the party
from whom indemnification is sought of a claim for indemnity
hereunder.
SECTION 8.2. Indemnification.
(a) Subject to Sections 3.30, 8.1 and 8.2(b)
and further subject (without limitation) to Section 6.2 of the
Tax Indemnification Agreement, and as limited by Sections
8.2(a)(4) and 8.2(a)(5), from and after the Closing, Seller
agrees to indemnify Buyer, Parent and the Company against,
and hold Buyer, Parent and the Company harmless from, any
damage (including punitive damages and treble damages),
claim, liability or expense, including interest, fines, penalties
and reasonable attorneys' fees, in each case whether incurred
in connection with a final judgment, award or disposition of
the matter or settlement (collectively "Damages"), arising out
of:
(1) the breach of any representation
or warranty of Seller that survives the Closing for such
period of survival as provided in Section 8.1 and the
breach of any covenant or agreement of Seller
contained in this Agreement, provided, that in no event
shall Seller have any liability with respect to the
conversion of the Shares into warrants to bearer;
(2) the contribution by Seller to the
Company (more fully described in Section 3.26);
(3) the Company's ownership or
leasehold interest in any real property, including any
Damages relating to pollution, human health and safety
or protection of the environment;
(4) those lawsuits consolidated by
order of the Judicial Panel on Multidistrict Litigation
and known as the Insurance Antitrust Litigation,
brought against the Company by any State attorneys
general or private plaintiffs alleging violations by the
Company of United States Federal or State antitrust
laws during the period prior to the Closing Date,
provided, that Seller's indemnification obligation for
such matters shall be limited to money Damages
(including cash required of the Company in order to
fund any reinsurance entity separate from the
Company established under any settlement or final
award or adjudication or other final disposition (a
"Reinsurance Provider")) and all fees and expenses
incurred by plaintiffs' counsel to the extent the
Company is liable therefor but in no event shall include
any loss of business or consequential damages or
damages resulting from any change in the manner in
which the business of the Company is operated as a
result of such settlement, final award, adjudication or
other final disposition, and, provided, further, that
Seller shall, at its option, either (A) acquire any shares
or other ownership interest in any Reinsurance
Provider that the Company or any of its Affiliates
would otherwise be required to acquire in connection
with any such settlement, final award, adjudication or
other final disposition or (B) indemnify the Company
for any Damages arising out of the Company's
acquisition of such ownership interests, provided that in
the case of clause (B) above, Seller shall receive all
benefits associated with any such ownership interests;
and
(5) any judgment after final
adjudication or settlement, with specific damages
awarded or agreed to against M.A.J. Hayden under the
first, second, and fifth counts of the complaints of New
England Reinsurance Corporation in the pending
lawsuits captioned New England Reinsurance
Corporation v. Palange & Associates, Inc. et al.
(Commonwealth of Massachusetts Superior Court,
Suffolk, Docket Nos. 90-4383 and 90-1926) and in any
subsequent actions brought against M.A.J. Hayden by
private plaintiffs, arising out of the same facts and only
for the same allegations; it being understood that to the
extent that the Company has indemnified M.A.J.
Hayden for such liability, and/or to the extent of any
judgment after final adjudication or settlement, with
specific damages awarded or agreed to against the
Company under the aforesaid counts or allegations
solely for its vicarious liability for the alleged actions of
M.A.J. Hayden, the Seller shall indemnify the
Company. Reasonable attorneys' fees for joint counsel
and defense costs and expenses in connection with the
above counts or allegations shall be apportioned to the
Seller on the same basis that the specific damages
finally awarded or agreed to against M.A.J. Hayden
and/or the Company for such vicarious liability on
those counts or allegations bear to the specific damages
finally awarded or agreed to against the Company for
its direct liability under such counts or allegations and
under all other counts or allegations. Parent and Buyer
shall (and shall cause the Company to) use reasonable
commercial efforts to obtain the cooperation of M.A.J.
Hayden in the defense of such lawsuits.
(b) In addition to the limitations set forth in Section
8.2(a), Seller's indemnification obligation shall be
limited as follows:
(1) the amount of any Damages to be
indemnified by Seller under this Section 8.2 or Sections
7.1 or 8.4 shall be reduced by an amount (the "Buyer
Tax Benefit") equal to the excess of (A) the amount of
Taxes that would have been payable in a taxable year
by Buyer, Parent or the Company, as the case may be,
if Buyer, Parent or the Company had not incurred the
Damages over (B) the Taxes actually payable by Buyer,
Parent or the Company, as the case may be, in such
taxable year, provided, that the Buyer Tax Benefit shall
include any refund or reduction of Taxes actually
received or realized from the incurrence of the
Damages;
(2) the amount of any Damages to be
indemnified by Seller under this Section 8.2 or Sections
7.1 or 8.4 shall be reduced by the net amount that
Buyer, Parent or the Company, as the case may be,
recovers (after deducting all attorneys' fees, expenses
and other costs of recovery) from any insurer or third
party liable for such Damages provided, that Buyer,
Parent, or the Company, as the case may be, shall not
be obligated to request, pursue or obtain such
insurance or third party proceeds prior to receiving
indemnification proceeds from Seller, and provided,
further, that to the extent that Seller makes any
indemnification payment to Buyer, Parent or the
Company, Seller shall be subrogated to the rights of
Buyer, Parent or the Company, as the case may be, to
obtain such insurance or third party proceeds, and,
upon its receipt of the full amount of the
indemnification payment owing hereunder with respect
to such matter, Buyer, Parent or the Company, as the
case may be, shall assign all such rights to Seller (it
being understood that if such rights are not assignable,
then Buyer, Parent or the Company, as the case may
be, will cooperate with Seller to the extent reasonably
requested in order to pursue such subrogated rights);
(3) Buyer, Parent and the Company
shall be entitled to indemnification for Damages under
this Section 8.2 only when the aggregate of all such
Damages exceeds US $1,000,000 (in which event Buyer,
Parent and the Company shall be entitled to
indemnification for such Damages in excess of
US $500,000), provided, that the limitations set forth in
this subparagraph (b)(3) shall not (subject to
subparagraph (b)(5) below) limit any claim for
indemnification under the Tax Indemnification
Agreement (which is made in accordance with the
terms thereof) even though the matter that resulted in
such claim also resulted in a breach of Section 3.14;
(4) Seller's aggregate liability under
this Section 8.2 shall not exceed US $50,000,000,
provided, that the limitations or indemnification for
Damages set forth in this subparagraph (b)(4) shall not
(subject to subparagraph (b)(5) below) limit any claim
for indemnification under the Tax Indemnification
Agreement (which is made in accordance with the
terms thereof) even though the matter that resulted in
such claim also resulted in a breach of Section 3.14;
and
(5) Seller shall not be liable for
duplicative indemnification payments under the
Transaction Documents. In the event that Buyer could
proceed against Seller either in relation to any of the
matters contained in Section 3.14 hereof or under the
Tax Indemnification Agreement in respect of the same
matter and chooses to proceed under Section 3.14,
Buyer shall not be entitled to any greater recovery than
it would have been entitled to if it had proceeded
under the Tax Indemnification Agreement.
(c) Subject to Section 8.2(d), from and after
the Closing, Buyer and Parent (jointly and severally) agree to
indemnify Seller and its Affiliates and to cause the Company
to indemnify Seller and its Affiliates against and hold Seller
and its Affiliates harmless, from any Damages (1) arising out
of the breach of any representation or warranty of Buyer or
Parent that survives the Closing for such period of survival as
provided in Section 8.1, and the breach of any covenant or
agreement of Buyer or Parent contained in this Agreement,
and (2) any liability (other than liability relating to Taxes)
arising solely from the events and occurrences described in
Section 3.10 of the Tax Indemnification Agreement.
(d) In addition to the limitations set forth in
Section 8.2(c), the Buyer's and Parent's indemnification
obligations shall be limited as follows:
(1) the amount of any Damages to be
indemnified by Buyer and Parent under this Section 8.2
shall be reduced by an amount (the "Seller Tax
Benefit") equal to the excess of (A) the amount of
Taxes that would have been payable in a taxable year
by Seller if Seller had not incurred the Damages over
(B) the Taxes actually payable by Seller in such taxable
year, provided, that the Seller Tax Benefit shall include
any refund or reduction of Taxes actually received or
realized from the incurrence of the Damages;
(2) the amount of any Damages to be
indemnified under this Section 8.2 shall be reduced by
the net amount that Seller or its Affiliates recovers
(after deducting all attorneys' fees, expenses, and other
costs of recovery) from any insurer or third party liable
for such Damages, provided, that Seller or its Affiliates
shall not be obligated to request, pursue or obtain such
insurance or third party proceeds prior to enforcing or
receiving indemnification proceeds from Buyer and/or
Parent, and provided, further, that to the extent that
Buyer makes any indemnification payment to Seller or
its Affiliates, Buyer or Parent shall be subrogated to
the rights of Seller or its Affiliates, as the case may be,
to obtain such insurance or third party proceeds and,
upon its receipt of the full amount of the
indemnification payment owing hereunder, with respect
to such matter, Seller or its Affiliates, as the case shall
be, shall assign all such rights to Buyer or Parent (it
being understood that if such rights are not assignable,
then Seller or its Affiliates, as the case may be, will
cooperate with Buyer and Parent to the extent
reasonably requested in order to pursue such
subrogated rights);
(3) Seller shall be entitled to
indemnification for Damages under this Section 8.2
only when the aggregate of all such Damages exceeds
US $1,000,000 (in which event Seller shall be entitled
to indemnification for such Damages in excess of
US $500,000);
(4) the aggregate liability of Buyer and
Parent under this Section 8.2 shall not exceed
US $50,000,000; and
(5) Buyer and Parent shall not be
liable for duplicative indemnification payments under
the Transaction Documents.
SECTION 8.3. Indemnification Procedures.
(a) This Section 8.3 shall not apply to claims
relating to Tax matters (Section 3.14) or to LUC
Indemnification (Section 8.4) or to claims under the Tax
Indemnification Agreement, the procedures relating to such
issues being set forth in the respective Section of this
Agreement or in the Tax Indemnification Agreement, as the
case may be. Upon any Person entitled to be indemnified
under Section 8.2 (the "Indemnified Person") receiving notice
of any claim or the commencement of any action, or otherwise
becoming aware of a fact, condition or event for which
indemnification is provided under Section 8.2, the Indemnified
Person will reasonably promptly notify the Person from whom
indemnification is sought (the "Indemnifying Person") in
writing of such fact, condition or event, but in any event
within ten (10) days after such Indemnified Person has actual
knowledge of the facts constituting the basis for
indemnification; provided, however, that the failure to provide
such notice shall not relieve the Indemnifying Person of its
indemnification obligations hereunder unless such failure
materially prejudices the ability of such Indemnifying Person
to contest such Damages. If such fact, condition or event is
the assertion of a claim or the bringing of any action or
proceeding by a third party, then the Indemnifying Person will
be entitled to participate in or take charge of the defense or
investigation of such claim, action or proceeding (or that part
of any claim, action or proceeding for which indemnification is
being provided) with counsel reasonably satisfactory to the
Indemnified Person; provided, however, that the Indemnifying
Person and its counsel shall proceed with diligence and in
good faith with respect thereto. If such fact, condition or
event involves a dispute or review by any Governmental
Authority or Tax Authority or could affect the Indemnified
Person's relationship with any Governmental Authority or Tax
Authority, then the Indemnifying Person shall regularly consult
with the Indemnified Person regarding the Indemnifying
Person's course of action. After notice to the Indemnified
Person of the Indemnifying Person's election to assume the
defense or investigation of any such claim, action or
proceeding or part thereof (as the case may be), the
Indemnifying Person shall not be liable to the Indemnified
Person under this Article VIII for any legal or other expenses
in connection with the defense thereof other than reasonable
costs of investigation, provided that the Indemnified Person
shall have the right to employ separate counsel and to
participate in the defense or investigation of such claim, action
or proceeding or part thereof (as the case may be) if (1) the
Indemnified Person has reasonably concluded that use of
counsel of the Indemnifying Person's choice could reasonably
be expected to give rise to a conflict of interest (in which
event the Indemnifying Person shall bear one-half (.5) of the
expenses of such separate counsel) or (2) the Indemnifying
Person shall not have employed counsel to represent the
Indemnified Person within a reasonable time after notice of
the assertion of any such claim or institution of any such
action or proceeding (in which event the Indemnifying Person
shall bear all the reasonable expenses of such separate
counsel). In the event that an Indemnifying Person elects not
to assume the defense of a claim, action or proceeding or part
thereof (as the case may be), the Indemnified Person and its
counsel shall proceed with diligence and in good faith with
respect thereto and the Indemnifying Person will not be
obligated to pay the fees and expenses of more than one
counsel for all Indemnified Persons with respect to such claim,
action or proceeding unless the Indemnified Person has
reasonably concluded that use of one counsel would
reasonably be expected to give rise to a conflict of interest
between such Indemnified Person and any other of such
Indemnified Persons with respect to such claim or part thereof
(as the case may be) in which event the Indemnifying Person
shall bear one-half (.5) of the expenses of such additional
counsel. The parties hereto agree to render to each other
such assistance as may be reasonably requested in order to
insure the proper and adequate defense of any such claim,
action or proceeding.
(b) If the Indemnifying Person has elected to
assume the defense or investigation of any claim, action or
proceeding or part thereof pursuant to Section 8.3(a), the
Indemnifying Person shall be entitled to settle or compromise
such claim, action or proceeding or part thereof; provided,
however, that any such settlement or compromise involving
the imposition of equitable remedies or involving the
imposition of any material obligations on the Indemnified
Person other than financial obligations for which such
Indemnified Person shall be indemnified hereunder shall
require the prior written consent of the Indemnified Person
(which consent shall not be unreasonably withheld). If the
Indemnifying Person elects not to assume the defense of a
claim, action or proceeding or part thereof (as the case may
be) pursuant to Section 8.3(a), the Indemnified Person shall
be entitled to settle or compromise such claim, action or
proceeding or part thereof (as the case may be) only with the
consent of the Indemnifying Person (which consent shall not
be unreasonably withheld). If the Indemnified Person is
represented by separate counsel pursuant to Section 8.3(a),
such settlement or compromise shall be effected only with the
prior written consent of the Indemnified Person (which
consent shall not be unreasonably withheld). No Indemnifying
Person shall be required to consent to entry of any judgment
or enter into any settlement or compromise which does not
include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Person of a release
from all liability in respect to such claim or litigation.
Whenever the Indemnified Person or the Indemnifying Person
either receives or makes a firm offer to settle a claim for
which indemnification is sought under Section 8.2, it shall
promptly notify the other of such offer. If the Indemnifying
Person refuses to accept such offer within ten (10) Business
Days after receipt of such offer (or of notice thereof), such
claim shall continue to be contested and, if such claim is
within the scope of the Indemnifying Person's indemnity
contained in Section 8.2, the Indemnified Person shall be
indemnified pursuant to the terms hereof. If the Indemnifying
Person notifies the Indemnified Person in writing that the
Indemnifying Person desires to accept such offer, but the
Indemnified Person refuses to accept such offer within
ten (10) Business Days after receipt of such notice, the
Indemnified Person may continue to contest such claim and,
in such event, the total maximum liability of the Indemnifying
Person to indemnify or otherwise reimburse the Indemnified
Person hereunder with respect to such claim shall be limited
to, and shall not exceed, the amount of such offer, plus
reasonable out-of-pocket costs and expenses (including
reasonable attorneys' fees and disbursements) to the date of
notice that the Indemnifying Person desires to accept such
offer; provided, however, that this sentence shall not apply to
any settlement of any claim involving the imposition of
equitable remedies or to any settlement imposing any material
obligations on such Indemnified Person other than financial
obligations for which such Indemnified Person will be
indemnified hereunder.
SECTION 8.4. LUC Indemnification.
(a) As used in this Agreement:
(1) "LUC Benefits" means the aggregate value, net
of all Taxes thereon, of all amounts or benefits in money
or money's worth for the time being received by the
Company:
(A) under or by virtue of the
Shareholders Agreement (as defined in Section
8.4(a)(2)(A)(ii)(I)) or any documents entered
into by the Company pursuant thereto or the
membership of or the holding by the Company
of any shares or securities in Market Building
Limited ("MBL") other than any such shares or
securities voluntarily acquired by the Company
after the date hereof; and
(B) by virtue of the Company
securing one or more underleases of
accommodation in Number 3 Minster Court
London EC3 (also known as the London
Underwriting Centre ("LUC"))
("Accommodation") on rental or other terms
more favorable to the Company (by virtue of its
status as a shareholder in MBL or its
participation in the Shareholders Agreement)
than would have been available in the open
market to a non-shareholder in MBL in respect
of a similar underlease of similar
accommodation space granted at the same time
as the relevant underlease (it being
acknowledged that the terms currently proposed
by MBL on which the Company is proposing to
take an underlease of Suite 1/2 in the LUC are
no more favorable to the Company than those
available in the open market to a non-
shareholder in MBL) unless at the time of the
grant of the relevant underlease the only shares
in MBL held by the Company are shares
voluntarily acquired by the Company after the
date hereof; and
(C) being the net proceeds of
sale arising from a disposal of (i) the shares in
MBL which are owned by the Company as at
the date hereof less their value as of the date of
this Agreement which is agreed at UK 10,000 and
(ii) any other shares in MBL acquired by the
Company other than any voluntarily acquired by
the Company after the date hereof; and
(D) amounts received by the Company under any
sub-underlease of Excess Space (as defined below);
provided, however, that in the case of any benefit not
comprising the receipt by the Company of cash the
value of such benefit shall not be treated as having
been received by the Company until such benefit shall
have been realized by the Company and the value of
such benefit shall be the value realized by the
Company in respect thereof;
but does not include:
(E) any amounts or benefits
with a value or aggregate value for any calendar
year of less than UK 10,000; and
(F) the repayment by MBL of
any loan made by the Company to MBL prior to
the date hereof and interest paid by MBL on
such loan; and
(G) any amounts or benefits
arising under or by virtue of any shares or
securities in MBL or the ownership thereof
which have been voluntarily acquired by the
Company after the date hereof or any benefits
received by the Company under or by virtue of
the Shareholders Agreement at a time when the
only shares in MBL owned by the Company are
shares voluntarily acquired after the date hereof.
(2) "LUC Liabilities" means:
(A) all sums paid by the
Company by virtue of the obligations undertaken
or incurred by the Company pursuant to:
(i) any guarantee or similar
assurance given by the Company, or
required to be given by the Company,
pursuant to the Shareholders Agreement
or otherwise, in relation to or in
connection with the LUC or the
construction or fitting out thereof or the
supply of goods thereto including:
(I) the guarantee by the
Company of the obligations of
MBL and/or The London
Underwriting Centre Limited
contained in the Agreement
relating to the development and
leasing of the LUC dated 27
February 1990 (the "Development
Agreement"); and
(II) the guarantee by the
Company of the Equipment Lease
Agreement dated 28 September
1990; and
(III) the guarantee
of the Company to be contained in
the Lease of the LUC to be
granted to MBL pursuant to the
Development Agreement; and
(IV) any liability of
the Company as tenant or
otherwise in the event of the
Company or any other guarantor
of the said Lease of the LUC
(whether alone or with others)
being required to accept and take
up a new Lease by virtue of its
obligations to be contained in the
guarantee referred to in sub-
paragraph (III) of this Section
8.4(a)(2)(A)(i); and
(V) any guarantee or
assurance to be given in any
sublease of part of the LUC
(excluding any such guarantees or
assurances given by the Company
in relation to any underlease of
Accommodation for the use and
enjoyment of the Company or any
Affiliate and any related or
supplemental documentation
required to be entered into
pursuant to or in conjunction with
the grant of such underlease of
Accommodation);
(ii) (I) the Shareholders
Agreement dated 13 June 1989
relating to MBL as varied and
supplemented by a Supplemental
Shareholders Agreement dated 27
February 1990 and a Second
Supplemental Shareholders
Agreement dated 13 November
1990 (together "the Shareholders
Agreement") (save and except for
any sublease of Accommodation
required to be entered into
pursuant to Clause 10 thereof and
except for Clauses 11.2 and 12
thereof) (including any documents
or liabilities the Company may be
required to enter into or undertake
pursuant to the Shareholders
Agreement) or the membership of
or the holding by the Company of
any shares or securities in MBL
(other than any voluntarily
acquired by the Company after the
date of this Agreement) or any
nominee of the Company being a
director thereof; and
(II) any sublease of
Accommodation (and all liabilities
and outgoings associated
therewith) required to be entered
into pursuant to Clause 10 of the
Shareholders Agreement (other
than the initial underlease of Suite
1/2 in the LUC which the
Company is proposing to accept
even if a requirement to accept the
same shall be made under the said
Clause 10); provided, however,
that if the Company or any of its
Affiliates shall occupy such
Accommodation or any part
thereof the liabilities and
outgoings associated with such
Accommodation or the relevant
part thereof (duly apportioned pro
rata to the net lettable area
occupied compared to the total net
lettable area thereof) shall be
excluded from the LUC Liabilities
(any such Accommodation in
excess of the requirements of the
Company or its Affiliates being
herein referred as "Excess Space");
and the references to the documents and
agreements referred to above in this
Section 8.4(a)(2)(A) shall be deemed to include
references to the same as varied, supplemented
or replaced from time to time whether before or
after the date hereof;
(B) any unrecovered costs,
expenses and liabilities incurred by the Company
pursuant to Section 8.4(d) and in connection
with performing its obligations under Section
8.4(d)(4) and in enforcing any sub-underlease of
Excess Space; and
(C) any liability of the
Company for breach of Clause 11.2 of the
Shareholders Agreement by virtue of compliance
by the Company with the provisions of Section
8.4(e) or Section 8.4(f)(2) or in respect of the
Company's agreement herein to take actions
which will or may breach the said Clause 11.2
unless such liability arises by virtue of a breach
by the Company of Section 8.4(e)(2)(B)(ii);
provided, however, that there shall be excluded from the LUC
Liabilities any amount of Tax to the extent that the Company
is able to reclaim the same or claim a credit against any other
liability to Tax in its dealings with the relevant Tax Authority.
(b) (1) Notwithstanding and without
regard to the application of Section 8.1, Seller hereby
covenants with Buyer to indemnify the Company
against any and all Damages which the Company has
incurred but not yet discharged or which the Company
incurs in the future under or in connection with the
LUC Liabilities;
(2) Buyer hereby covenants with Seller
to procure the Company to pay to Seller a sum or sums
equivalent to the LUC Benefits which the Company
receives;
(3) (A) Payments under
paragraphs (1) and (2) above shall be accounted
for as set out in Section 8.4(c) below.
(B) In respect of amounts or
benefits the aggregate of which for the relevant
calendar year is initially less than UK 10,000 but
which subsequently exceeds that amount in the
relevant calendar year and fall within the
definition of LUC Benefits, the full amount of
the same then received in the relevant calendar
year shall be treated as an LUC Benefit
received by the Company in the fiscal quarter in
which the Company receives the amount as a
result of which the said aggregate exceeds
UK 10,000, and subsequent receipts in that calendar
year of amounts or benefits in excess of the
initial UK 10,000 shall be accounted for as received
without reference to the said figure of UK 10,000.
(c)(1) At the end of each fiscal quarter, the
LUC Liabilities incurred by the Company in that quarter and
the LUC Benefits received by the Company in that quarter
shall be calculated and:
(A) if the LUC Liabilities incurred by
the Company in that quarter are greater than the LUC
Benefits received by the Company in that quarter then
Seller shall pay the difference to the Company.
(B) if the LUC Benefits received by
the Company in that quarter are greater than the LUC
Liabilities incurred by the Company in that quarter,
then the Company shall pay the difference to Seller.
(C) if the LUC Liabilities incurred by
the Company in that quarter equal the LUC Benefits
received by the Company in that quarter then no
payment under this Section 8.4(c) shall be payable in
respect of the relevant fiscal quarter.
(2) The calculations at the end of each fiscal
quarter required by Section 8.4(c)(1) shall be produced by the
Company and shall be subject to the review of Seller.
(d) Throughout the duration of the indemnity
contained in this Section 8.4, Buyer will procure that the
Company will use commercially reasonable efforts to keep to
the minimum the amount of the LUC Liabilities and to
maximize the LUC Benefits so far as it is reasonably able to
do so and that in that connection the Company shall:
(1) as often as Seller reasonably requests
and so far as it may then be commercially practicable
to cause the release of the Company from obligations
which may give rise to any future LUC Liabilities and
the sale of the Company's shareholding in MBL and
any securities of whatever nature issued by MBL to the
Company whether as security for any loan made by the
Company to MBL or otherwise (excluding any shares
or securities voluntarily acquired by the Company after
the date of this Agreement), provided that the
Company's obligations under this Section 8.4(d)(1) are
subject to the terms of the sale being such that the
Company receives at least UK 10,000 for the Company's
shares in MBL which are held as of the date of this
Agreement and a sum equivalent to the amount of any
loan and interest payable to the Company as referred
to in Section 8.4(a)(1)(F) (or, in the event that and to
the extent that such amounts are not paid, Seller shall
make good the difference to the Company);
(2) take reasonable steps to pursue every right of
contribution, insurance, claim, right of indemnity, right
of set-off or counterclaim and every other right enjoyed
by the Company as far as is commercially reasonable which
would have the effect of minimizing or reducing the amount
of the LUC Liabilities or maximizing or increasing the LUC
Benefits;
(3) accept an underlease of Suites 1/2
in the LUC on the terms offered to other shareholders
in MBL for the proposed initial term of approximately
five and one-half (5.5) years (and if the Company shall
not do so, the liabilities of Seller under this Section 8.4
shall not exceed those which would have arisen had the
Company done so); provided that for this purpose the
Company shall not be required to accept any
underlease for any further terms or occupy any space in
the LUC; and
(4) use reasonable efforts to obtain all
necessary consents to allow any Excess Space to be sub-
underlet and to sub-underlet such Excess Space to
Seller or as Seller may reasonably require on arms
length open market terms and thereafter to enforce the
terms of any relevant sub-underlease of Excess Space.
(e) (1) Buyer will procure that the
Company shall so far as the Company is reasonably
able to do so provide Seller upon request with copies
of all documents, correspondence, information,
accounts, bills or other records relating to the subject
matter of this Section 8.4 which are in the possession,
custody or power of the Company or to which it may
have access (collectively, "Information") and provide
Seller with reasonable facilities to inspect the originals
of such copies.
(2) (A) The Company's
obligations to provide Information as referred to
in Section 8.4(e)(1) above and under Section
8.4(f) are subject to the Company's
confidentiality obligations under the
Shareholders Agreement.
(B) (i) Seller shall keep
confidential all Information supplied by the
Company pursuant to this Section 8.4 except
insofar as such information is in the public
domain (otherwise than by virtue of a breach by
Seller of its confidentiality obligations).
(ii) The parties hereto
shall (without prejudice to any other
confidentiality provision herein contained) keep
confidential the existence of the provisions of
this Section 8.4(e) and Section 8.4(f) and the
fact of disclosure of any Information pursuant to
this Section 8.4(e) or Section 8.4(f).
(C) If the Company and Seller
so agree (but not otherwise) Buyer will procure
that the Company shall use all reasonable efforts
to procure that the parties to the Shareholders
Agreement agree that the Information may be
provided to Seller and for that purpose Seller
shall enter into such undertakings as to
confidentiality as may be reasonably required.
(D) (i) In the event that the
Company is prevented by process of law from
disclosing in whole or in part any Information
(and for this purpose the threat of proceedings
by any party to the Shareholders Agreement
shall be treated as prevention by process of law),
Buyer will procure that the Company shall using
utmost good faith certify to Seller in writing the
amount of any relevant LUC Liabilities and of
any LUC Benefits received and shall provide
such Information in connection therewith as the
Company may lawfully do.
(ii) In the event that any
error or misstatement shall be found in any
certificate provided pursuant to Section
8.4(e)(2)(D)(i) there shall forthwith be made
such adjustments of accounts between the
parties as shall be found to be necessary.
(E) Seller hereby covenants
with Buyer to indemnify the Company on
demand against all Damages arising by virtue of
(i) any breach of Clause 11.2 of the
Shareholders Agreement caused by the
disclosure to Seller of any Information pursuant
to this Agreement or any matter pursuant to
Section 8.4(f) or (ii) its agreement herein to do
so.
(f)(1) If the Company is requested or
makes a proposal to assume any obligation or liability
under or by virtue of the Shareholders Agreement or
otherwise which would increase the LUC Liabilities by
more than UK 10,000 and the Company is not then
obliged to assume the same or has voting rights as to
whether or not the same shall be assumed, then any
additional obligation or liability which the Company
assumes pursuant to that request or proposal and which
would not otherwise have been incurred shall not form
part of the LUC Liabilities unless:
(A) the Company did not vote
in favor of assuming the same, or
(B) the Company did vote in
favor of assuming the same and either;
(i) Seller had agreed or
subsequently agrees to the Company so voting or
assuming the same; or
(ii) the Company would
have been obliged to assume the same even if
the Company had not voted in favor of assuming
the same.
(2) Notwithstanding the provisions of
Section 8.4(e)(1) and without prejudice to the
remainder of Section 8.4(e), Buyer will procure
that the Company shall disclose to Seller any
fact, information, or circumstance known to the
Company which is likely to lead to a material
increase in the LUC Liabilities.
(g) If Seller shall request the Company to
sell its shares and/or other securities in MBL to Seller or any
third party who is ready, willing and able (subject to any pre-
emption provision in the Shareholders Agreement or pursuant
to the Articles of Association of MBL) to buy the same, Seller
shall fully set out in writing the terms on which Seller or the
third party is proposing to acquire the same, and the Company
may by notice in writing to Seller within twenty-eight (28) days
of receipt of the full terms decline to proceed with the sale, in
which event:
(1) Buyer will procure that the
Company shall on the date of giving the
Company's notice pay to Seller the price agreed
to be paid by Seller or the third party for the
shares or other securities (to the extent that, in
the case of the shares in MBL held by the
Company as at the date hereof, the price or
value exceeds UK 10,000 and, in the case of other
securities, the amounts secured thereby (or the
payment thereof) form part of the LUC
Benefits) and, if Seller had agreed to pay any
amount to the third party, Seller shall on that
date pay such amount to the Company, and any
amount so paid by Seller shall not be treated as
part of the LUC Benefits; and
(2) Buyer's obligation to procure the
Company to seek to sell the same pursuant to
Section 8.4(d)(1) shall cease; and
(3) any amounts or benefits
subsequently received by the Company under or
by virtue of such shares and/or securities or
ownership thereof and any proceeds of disposal
thereof shall not form part of the LUC Benefits
and may be retained by the Company for its own
account; and
(4) Seller's obligations under this
Section 8.4 shall thenceforth be construed as if
any sums paid under any liabilities arising after
the date of the Company's notice under or by
virtue of the relevant shares and/or securities or
ownership thereof were excluded from the LUC
Liabilities; and
(5) (A) if it was a term of the sale
that Seller would procure the release in whole
or in part of the Company from any liability and
amounts paid by the Company by virtue of that
liability would form part of the LUC Liabilities,
then any amounts paid by the Company under
or by virtue of any such liability, to the extent
the same was intended to have been released
and which arises after the date of the Company's
notice, shall be excluded from the LUC
Liabilities.
(B) if it was a term of the sale
that the third party would counter-indemnify
Seller against its liability to indemnify the
Company against LUC Liabilities under this
Section 8.4 or any of them, then in relation to
LUC Liabilities arising after the date of the
Company's notice or the relevant ones thereof
which were to be the subject of the counter-
indemnity the indemnity contained in this
Section 8.4 shall terminate.
(6) any shares or securities which the
Company shall decline to sell under this Clause 8.4(g)
shall be treated for all purposes of this Section 8.4 as
shares or securities voluntarily acquired by the
Company on the date of the giving of the Company's
notice.
(7) to the extent that any LUC
Benefits derive from or are attributable to either:
(A) shares or securities
retained by the Company pursuant to this Clause
8.4(g) or
(B) any obligations of the
Company, sums paid in relation to which would
but for the operation of this Clause 8.4(g) have
formed part of the LUC Liabilities or been the
subject of Seller's indemnity
Buyer's obligations to procure the Company to account
for such LUC Benefits shall cease.
SECTION 8.5. Indemnification Payments.
Notwithstanding any other provisions of this Agreement to the
contrary, all payments due from Seller in respect of Seller's
indemnification obligations under this Agreement or any of
the Transaction Documents shall be paid to Buyer. Such
payments shall be treated by Seller and Buyer as a reduction
in the purchase price payable under this Agreement.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Termination. This Agreement
may be terminated at any time prior to the Closing Date:
(a) by mutual agreement in writing of Buyer,
Parent and Seller;
(b) by either Buyer or Seller upon written
notice to the other parties (1) if the Closing shall not have
occurred by September 30, 1993 or such later date as the
parties shall have agreed to in writing, provided that the non-
occurrence of the Closing is not attributable to a breach of the
terms hereof by the party seeking termination, or (2) if any
Governmental Authority shall have issued an injunction,
decree or order or taken any other action permanently
enjoining, restraining or otherwise prohibiting the Closing;
(c) by Buyer if there has been a breach by
Seller of any representation, warranty, covenant or agreement
set forth in this Agreement that is qualified as to materiality
or a material breach by Seller of any representation, warranty,
covenant or agreement that is not so qualified, and such
breach shall not have been corrected or cured to the
reasonable satisfaction of Buyer within ten (10) Business Days
after Buyer has provided written notice thereof to Seller;
(d) by Buyer if it rejects a proposed amendment
of a Schedule pursuant to Section 7.10;
(e) by Seller if there has been a breach by
Buyer or Parent of any representation, warranty,
covenant or agreement set forth in this Agreement that is
qualified as to materiality or a material breach of any
representation, warranty, covenant or agreement that is not so
qualified and such breach shall not have been corrected or
cured to the reasonable satisfaction of Seller within ten (10)
Business Days after Buyer or Parent has provided written
notice thereof to Seller;
(f) by Buyer not later than the first Business
Day following the Initial Due Diligence Period if Buyer is not
satisfied, in its sole discretion, with its due diligence
investigation of the Company pursuant to Section 5.4; and
(g) by either Buyer or Seller if Buyer fails to
obtain the letters described in Section 5.7 by the Commitment
Date.
SECTION 9.2. Effect of Termination. In the
event of the termination of this Agreement by Buyer, Parent
or Seller as provided in Section 9.1, this Agreement shall
forthwith become void and there shall be no liability or
obligation on the part of Buyer, Parent or Seller or their
respective directors, officers or Affiliates; provided, however,
that, notwithstanding a termination of this Agreement, the
provisions of Section 5.4 (relating to the obligation of Buyer
and Parent to keep confidential and not to use certain
information and data obtained by them from the Company),
and Sections 7.3 and 7.4, shall continue in full force and
effect.
SECTION 9.3. Consent to Jurisdiction and
Service of Process. Any legal action, suit or proceeding
arising out of or relating to this Agreement or the transactions
contemplated hereby may be instituted in any United States
Federal court located in the Southern District of New York,
State of New York, and each party hereto agrees not to assert
as a defense in any such action, suit or proceeding, any claim
that it is not subject personally to the jurisdiction of such
court, that its property is exempt or immune from attachment
or execution, that the action, suit or proceeding is brought in
an inconvenient forum, that the venue of the action, suit or
proceeding is improper or that this Agreement or the subject
matter hereof may not be enforced in or by such court. Each
party further irrevocably submits to the jurisdiction of such
court in any such action, suit or proceeding. Buyer and Parent
hereby appoint LeBoeuf, Lamb, Leiby & MacRae, Attention:
Alexander M. Dye, at its offices at 125 West 55th Street, New
York, New York 10019, or its offices at such other address in
New York, New York, as it hereafter furnishes to the parties
to this Agreement, as their authorized agent to accept and
acknowledge on such parties' behalf service of any and all
process that may be served in any such action, suit or
proceeding. Any and all service of process and any other
notice in any such action, suit or proceeding shall be effective
against any party if given properly pursuant to the United
States Federal Rules of Civil Procedure or other applicable
rules. Nothing herein contained shall be deemed to affect the
right of any party to serve process in any manner permitted by
law or to commence legal proceedings or otherwise proceed
against any other party in any jurisdiction other than New
York.
SECTION 9.4. Notices. Unless otherwise
provided herein, any notice or other communication required
or permitted to be given hereunder shall be in writing and
shall be effective (a) when received, if delivered personally or
telecopied on a Business Day during normal business hours
(at the place of receipt) (with confirmation of receipt thereof
immediately thereafter) at the address or telecopy number
designated below or (b) on the second Business Day following
the date of delivery to an internationally recognized overnight
courier, if so delivered and marked for overnight (or the most
expediently available) delivery and fully prepaid, in each case,
addressed as follows:
if to Buyer:
Unionamerica Acquisition Company Ltd.
77 Gracechurch Street
London EC3V 0DA
England
Telephone: 071-548-5987
Telecopy: 071-621-1105
Attention: Peter J. Cooper
if to Parent:
Unionamerica Holdings Ltd.
77 Gracechurch Street
London EC3V 0DA
England
Telephone: 071-548-5987
Telecopy: 071-621-1105
Attention: Peter J. Cooper
in either case with copies to:
International Insurance Advisors, Inc.
33 Whitehall Street - 27th Floor
New York, New York 10004
U.S.A.
Telephone: (212) 487-3647
Telecopy: (212) 487-3894
Attention: Paul H. Warren
Oak Hill Partners
Park Avenue Tower
65 East 55th Street
New York, New York 10022
U.S.A.
Telephone: (212) 326-1500
Telecopy: (212) 754-5685
Attention: Jeffrey H. Freed
LeBoeuf, Lamb, Leiby & MacRae
125 West 55th Street
New York, New York 10019-5389
U.S.A.
Telephone: (212) 424-8000
Telecopy: (212) 424-8500
Attention: Alexander M. Dye, Esq.
if to Seller:
The Continental Corporation
180 Maiden Lane - 40th Floor
New York, New York 10038
U.S.A.
Telephone: (212) 440-3000
Telecopy: (212) 440-7982
Attention: Chief Financial Officer
with copies to:
The Continental Corporation
180 Maiden Lane - 40th Floor
New York, New York 10038
U.S.A.
Telephone: (212) 440-3000
Telecopy: (212) 440-7982
Attention: General Counsel
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
U.S.A.
Telephone: (212) 909-6000
Telecopy: (212) 909-6836
Attention: Deborah F. Stiles, Esq.
Lovell White Durrant
65 Holborn Viaduct
London EC1A 2DY
England
Telephone: 071-236-0066
Telecopy: 071-248-4212
Attention: John T. Young, Esq.
Any party may, from time to time, by five (5) days' notice
given in accordance with this Section 9.4 to the other parties,
designate another address or person for receipt of notices
hereunder.
SECTION 9.5. Entire Agreement; No Third
Party Beneficiaries. This Agreement (together with the
exhibits and schedules hereto, the other Transaction
Documents, and the Confidentiality Agreement) (a) contains
the entire agreement among the parties with respect to the
subject matter hereof, and supersedes all prior agreements,
written or oral, with respect thereto, and (b) except as set
forth in Section 7.5 or as otherwise expressly specified herein,
is not intended to confer upon any person other than the
parties any rights or remedies hereunder.
SECTION 9.6. Waivers and Amendments; Non-
Contractual Remedies; Preservation of Remedies. This
Agreement may be amended, modified or supplemented, and
the terms hereof may be waived, only by a written instrument
signed by the parties or, in the case of a waiver, by the party
waiving compliance. No delay on the part of any party in
exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any waiver on the part
of any party of any such right, power or privilege, nor any
single or partial exercise of any such right, power or privilege,
preclude any further exercise thereof or the exercise of any
other such right, power or privilege. The rights and remedies
herein provided are cumulative and are not exclusive of any
rights or remedies that any party may otherwise have at law or
in equity. The rights and remedies of any party based upon,
arising out of or otherwise in respect of any inaccuracy in or
breach of any representation, warranty, covenant or agreement
contained in this Agreement shall in no way be limited by the
fact that the act, omission, occurrence or other state of facts
upon which any claim of any such inaccuracy or breach is
based may also be the subject matter of any other
representation, warranty, covenant or agreement contained in
this Agreement (or in any other Contract between the parties)
as to which there is no inaccuracy or breach.
SECTION 9.7. Payments and Currency.
(a) Any and all amounts payable hereunder,
whether at the Closing or otherwise, shall be paid to the
appropriate party in United States dollars. No payment
obligation hereunder shall be discharged by amounts paid in
another currency.
(b) If (1) any monies owing under or pursuant
to this Agreement are received or recovered by one party
hereunder from any other party hereunder in a currency other
than United States dollars or (2) any judgment, settlement or
final adjudication of amounts owing under or pursuant to this
Agreement by one party hereunder to any other party
hereunder is denominated in a currency other than United
States dollars, then such monies, judgment, settlement or final
adjudication shall be converted into United States dollars at
the New York foreign exchange selling rate applicable to
trading among banks in amounts of US $1,000,000 or more (as
quoted at 3:00 p.m. Eastern time) as set forth in The Wall
Street Journal (Eastern Edition) with respect to the date on
which such monies are received or recovered or the date on
which payment pursuant to such judgment, settlement or final
adjudication is due and owing.
(c) If any of the monetary amounts specified in
Articles III, IV or V of this Agreement must be converted
from United States dollars to pounds sterling (or vice versa),
then such amounts shall be converted at the New York
foreign exchange selling rate applicable to trading among
banks in amounts of US $1,000,000 or more (as quoted at 3:00
p.m. Eastern time) as set forth in the July 1, 1993 edition of
The Wall Street Journal (Eastern Edition) with respect to
June 30, 1993.
SECTION 9.8. Binding Effect; No Assignment.
This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and legal
representatives. This Agreement shall not be assigned, in
whole or in part, by any party hereto.
SECTION 9.9. Severability. If at any time any
provision of this Agreement is or becomes illegal, invalid, void
or unenforceable in any respect under the law of any
jurisdiction, neither the legality, validity, or enforceability of
the remaining provisions hereof nor the legality, validity or
enforceability of such provision under the law of any other
jurisdiction shall in any way be affected or impaired thereby,
the remainder of the provisions of this Agreement shall
remain in full force and effect. The parties shall endeavor in
good faith negotiations to replace any invalid, illegal, void or
unenforceable provision with a valid, legal and enforceable
provision, the economic effect of which comes as close as
possible to the invalid, illegal, void or unenforceable provision.
SECTION 9.10. Counterparts. This Agreement
may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart
may consist of a number of copies hereof each signed by less
than all, but together signed by all of the parties hereto.
SECTION 9.11. Interpretation. The Exhibits
and Schedules are a part of this Agreement as if fully set forth
herein. All references herein to Sections, clauses, Exhibits
and Schedules shall be deemed references to such parts of this
Agreement, unless the context otherwise requires. The table
of contents and headings in this Agreement are for reference
only, and shall not affect the interpretation of this Agreement.
All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the
context may require. The phrase "to the knowledge of Seller"
or any similar phrase shall be deemed to refer to the
knowledge of any of the senior officers of Seller or the
Company, in each case, who were involved in the negotiation
of this Agreement or the preparation of any of the Schedules,
with such officers being deemed to have made reasonable
inquiry of the appropriate personnel of Seller, the Company
and other relevant Affiliates of Seller with respect to the
matter in question. The definitions of terms in this
Agreement shall be applicable to both the singular and the
plural forms of the terms defined where either such form is
used in this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall
be deemed to be followed by the words "without limitation."
The word "herein," "hereof" and "hereunder," and other words
of similar import, refer to this Agreement as a whole and not
to any particular Section or clause. The adoption of the
various monetary amounts as de minimis or maximum levels
(such as in Sections 5.1 and 5.2) or as a criterion resulting in
certain occurrences (such as in Section 7.4) is not intended by
the parties to be, and should not be construed as, an
indication of immateriality or materiality for purposes of any
of the Transaction Documents.
SECTION 9.12. Governing Law. THIS
AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS.
SECTION 9.13. Waiver of Jury Trial. Each
party hereby waives, to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in
respect of any litigation directly or indirectly arising out of,
under or in connection with any of the Transaction
Documents. Each party (a) certifies that no representative,
agent or attorney of any other party has represented, expressly
or otherwise, that such other party would not, in the event of
litigation, seek to enforce the foregoing waiver and (b)
acknowledges that it and the other parties have been induced
to enter into the Transaction Documents by, among other
things, the mutual waivers and certifications in this Section
9.13.
IN WITNESS WHEREOF, Buyer, Parent and
Seller have caused this Agreement to be duly executed by
their respective authorized officers as of the date first above
written.
UNIONAMERICA ACQUISITION COMPANY LTD.
By: /s/Paul H. Warren
Name:
Title: Director
UNIONAMERICA HOLDINGS LTD.
By: /s/Paul H. Warren
Name:
Title: Director
THE CONTINENTAL CORPORATION
By: /s/John F. Kirby
Name:
Title: Senior Vice President